US Stocks Drop as Traders Mull Rate-Hike Path: Markets Wrap

US stocks dropped as traders mulled the Federal Reserve’s path next year after central bank officials vowed to keep raising rates until they’re confident inflation has been subdued.
The S&P 500 and the tech-heavy Nasdaq 100 declined. Shares of Tesla Inc. gained in anticipation of Elon Musk stepping back from Twitter Inc., the social-media company that distracted him from running the electric-car maker for months. Twitter users voted 58% in favor of Musk stepping back from the leadership role. Treasuries dropped, with the policy-sensitive two-year yield around 4.22%.
Investors are still on the edge after recent remarks from the Fed and other hawkish central banks across the globe. But some may be looking past fears of an economic recession triggered by higher interest rates, and betting instead that inflation might be peaking, allowing the Fed and its peers some leeway in their tightening policy.
“I’m kind of more in the camp of they hike in February, and I do think they’ll hike again in March, but that’s probably it,” Matt Brill, head of US investment grade and senior portfolio manager at Invesco, said on Bloomberg Television. “We’re 90%-95% of the way done here. I think the floor has sort of been set and the worst is certainly behind us.”
But to Dennis DeBusschere, founder of 22V Research, the Fed restating their hawkish rhetoric complicates the near-term backdrop for the S&P 500.
“There is no near-term catalyst to reverse the market trend, but the downside to 3,800 is limited unless a negative catalyst appears,” he said.
Equity investors were also somewhat heartened by a vow from China’s top leaders to boost the economy next year by reviving consumption and supporting the private sector. While news of a Covid surge across China capped Asian market gains, Beijing’s pledge lifted energy and metals prices, with those sectors leading gains on Europe’s Stoxx 600 index.
The dollar was little changed as money markets weighed prospects of slowing US rate hikes, and amped up bets on higher rates elsewhere. The euro strengthened, following a string of hawkish comments from rate-setters.
On commodities, Beijing’s pro-growth pledge and a US move to refill strategic crude reserves boosted oil futures, though economic growth fears kept prices on track for a second monthly loss.
Key events this week:
China loan prime rates, Tuesday
Bank of Japan interest rate decision, Tuesday
US housing starts, Tuesday
EIA Crude Oil Inventory Report, Wednesday
US existing home sales, US Conference Board consumer confidence, Wednesday
US GDP, initial jobless ...
19 Dec 2022 10AM English South Africa Business News · Business

Other recent episodes

Pakistan pleads for flood relief after ‘cameras have gone’

Pakistan’s Foreign Minister Bilawal Bhutto Zardari urged the world to continue to help the South Asian nation recover from devastating floods ahead of a United Nations conference next month to mobilise funding. Pakistan is facing an economic crisis with reserves covering one month of imports, a dollar shortage and a…
19 Dec 2022 11PM 3 min

Yen surges on yield-curve change; Asia stocks fall: markets wrap

The yen strengthened as the Bank of Japan said it would let benchmark bond yields rise further. Asian equities headed for a fourth day of declines amid investors concern on the global inflation outlook. The BOJ kept policy rate unchanged, but increased the upper band limit on the yield target…
19 Dec 2022 11PM 2 min

What Led Twitter Users Into Voting Elon Musk Out: Timeline

After less than two months at the helm of Twitter Inc., Elon Musk asked his followers whether he should keep the job, pledging to abide by the result of the poll. They said he should step down. It’s the latest episode in a tumultuous series of events that’s played out…
19 Dec 2022 10AM 10 min

Asia stocks set to fall with focus on rates path: markets wrap

Asian stocks were poised to follow Wall Street lower on Monday as the Federal Reserve’s resolve to keep raising rates and a wave of Covid in Beijing damped sentiment for riskier assets. The dollar weakened slightly against most major currencies and the yen advanced, boosted by a report that the…
18 Dec 2022 7PM 4 min