Stocks Pare Drop After Comments From Fed’s Daly: Markets Wrap

(Bloomberg) — U.S. stocks pared losses after San Francisco Fed President Mary Daley warned that excessive tightening could be “unnecessarily painful” for the economy.

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The S&P 500 and Nasdaq 100 fell but are off session lows. Walt Disney Co. bucked the risk-on sentiment that swept through markets after it brought back former leader Bob Iger to replace his successor, Bob Chapek, as chief executive.

Crude oil futures pared losses after Saudi Arabia denied reports it was considering raising oil output ahead of next month’s OPEC+ meeting. The dollar rose as investors sought safe-haven assets. Treasuries cut profits.

China saw its first Covid-related death in almost six months on Saturday, and two more were reported on Sunday. Worsening outbreaks across the country are raising concerns that authorities may again resort to tougher restrictions. Outages could have a negative impact on supply chain dynamics and potentially exacerbate inflationary problems across economies.

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Read more. Oil falls on report Saudi Arabia mulls OPEC hike

This week, traders will also be looking to the minutes of the Federal Reserve’s latest policy meeting for further clues on the course of rate hikes. Daly said officials should be mindful of the lags in which monetary policy is transmitted through the economy as they raise interest rates further to reduce inflation.

“Now for the Fed, if we get some slowdown in inflation, which it looks like we might, but you don’t see that in the slowdown in services inflation, that’s related to a tight labor market,” Veronica Clark. A Citigroup economist said Monday on Bloomberg Television. “You should see that softening in the labor market data.”

While several central bank officials have reiterated their determination to keep interest rates on hold in recent days, they differ on how they will go. Atlanta Fed President Rafael Bostic has said he favors slowing the pace of rate hikes to no more than 1 percentage point hikes to try to give the economy a soft landing. Boston Fed President Susan Collins reiterated her view that the options are open for the size of a December rate hike, including the possibility of a 75 basis point move.

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This week’s main events:

  • US Richmond Fed manufacturing index, Tuesday

  • The OECD publishes its economic outlook on Tuesday

  • The Fed’s Loretta Mester and James Bullard speak Tuesday

  • S&P Global PMIs: US, Eurozone, UK, Wednesday

  • US MBA mortgage applications, durable goods, initial jobless claims, University of Michigan sentiment, new home sales, Wednesday

  • Minutes of the Federal Reserve’s November 1-2 meeting, Wednesday

  • The ECB publishes an account of its October policy meeting on Thursday

  • US stock and bond markets are closed on Thanksgiving Day, Thursday

  • US stock and bond markets close early on Friday

Some major movements in the markets.

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  • The S&P 500 was down 0.2% as of 1:14 p.m. New York time.

  • The Nasdaq 100 fell 0.9%

  • The Dow Jones Industrial Average was little changed

  • The MSCI World index rose 0.6%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.7%

  • The euro fell 0.8% to $1.0244

  • The British pound was down 0.7% at $1.1811

  • The Japanese yen fell 1.2% to $142.05

Cryptocurrencies

  • Bitcoin down 1.6% to $15,986.9

  • Ether fell 3.5% to $1,101.81

Bonds

  • The 10-year Treasury yield fell two basis points to 3.81%

  • Germany’s 10-year yield fell two basis points to 1.99%

  • UK 10-year yields fell five basis points to 3.19%

goods

  • West Texas Intermediate crude fell 0.6% to $79.59 a barrel.

  • Gold futures were down 0.8% at $1,754 an ounce.

This story was produced with the help of Bloomberg Automation.

– With assistance from Isabelle Lee, John Viljoen and Katarina Saraiva.

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