Wall Street ended the day lower on a choppy trading day on Monday, while US Treasury yields jumped as investors juggled between strong earnings and what Russia’s invasion of Ukraine could mean for global growth.
A significant reduction in global growth expectations from the World Bank, coupled with weak latest economic data from China in March, has instilled some pessimism in U.S. markets, which opened on Monday after a previous week shortened by vacations.
But a strong quarterly earnings report from Bank of America offset some of that worry, as investors braced for more big business earnings reports this week.
The Dow Jones Industrial Average ended down 0.11%, while the S&P 500 fell 0.02% and the Nasdaq Composite slipped 0.14%.
Markets were closed in Australia, Hong Kong and many parts of Europe for the Easter holiday.
“Equities continued to seek sustained bullish momentum amid high inflation, rising interest rates and dashed hopes of a ceasefire in Ukraine,” said Chris Larkin, chief executive. from E*TRADE.
Oil, bond yields jump
Oil prices closed more than 1% higher, boosted by concerns over tight global supply amid the Ukraine crisis.
Those concerns were amplified after Libya’s National Oil Corp said a “painful wave” of shutdowns was affecting its facilities, offsetting any worries about reduced demand from a locked-down China.
“With global supplies now so tight, even the most minor disruption is likely to have an outsized impact on prices,” said OANDA analyst Jeffrey Halley.
The looming prospect of aggressive interest rate hikes from the Federal Reserve helped push US Treasury yields to three-year highs while boosting other safe havens.
The Fed is now expected to raise rates by 50 basis points at its May and June meetings, at least, as it seeks to contain rapid inflation. Fed funds futures traders expect the Fed’s benchmark rate to rise to 1.28% in June and 2.67% next February from 0.33% currently.
“Despite nascent signs that inflation may ease and the Fed’s hawkish bets are being reduced, a 50 basis point rate hike for May appears all but stalled,” Deutsche Bank analysts wrote in a note. .
The benchmark 10-year note was last at 2.8373%, after hitting 2.884% earlier on Monday, the highest since December 2018.
Worries over the economic fallout helped push gold prices to a one-month high on Monday, with safe-haven spot gold lately rising 0.14% to $1,977.35 an ounce.
The dollar also got a boost as a safe haven, the dollar index, which tracks the greenback against a basket of six currencies, rose 0.47%.