Stocks Trim Drop as Solid Data Spur Bond Losses: Markets Wrap

(Bloomberg) — Another report showing the US economy entered the trade war on solid footing pushed stocks away from session lows, while bond yields rose amid speculation the Federal Reserve will stay on hold this week.

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A rebound in industrial shares helped the S&P 500 erase most of a slide that earlier approached 1%. Data showing a pick-up in growth at US service providers helped assuage concerns of a recession even as the outcome of President Donald Trump’s trade war has yet to be felt. In fact, the same report showed a jump in materials prices – signaling potential inflation pressures.

Attention will soon shift to Wednesday’s Fed decision after bond traders dialed back rate-cut bets that had steadily mounted as Trump’s trade war unleashed havoc in financial markets.

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As long as the economy holds firm, the central bank can more easily justify the standing pat. While Jerome Powell and his colleagues would typically welcome the latest inflation cooling, higher US duties on imports risk upending the progress on that front.

“Uncertainty rules amid a trade war and the ever-changing landscape of tariffs, but with the hard data on consumer spending and employment still hanging in there, the Fed will remain firmly planted on the sidelines,” said Greg McBride at Bankrate.

The S&P 500 fell 0.3%. The Nasdaq 100 slid 0.4%. The Dow Jones Industrial Average added 0.1%. The yield on 10-year Treasuries rose five basis points to 4.36%. The Bloomberg Dollar Spot Index fell 0.2%.

Oil sank as OPEC+ agreed to a bumper output increase. Taiwan’s dollar surged the most since 1988 on bets authorities might allow it to appreciate to help reach a trade deal with the US.

Treasury Secretary Scott Bessent touted the US as the “premier destination” for global capital and argued that the Trump administration’s policies will solidify that position — countering the so-called sell America theme that materialized last month.

Concerns about the international appeal of dollar-based assets materialized last month during a selloff in US stocks in the wake of Trump’s announcement of steep reciprocal tariffs on major trading partners. Contrary to typical practice, US Treasuries also tumbled — failing to play the haven asset role it has in the past.

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“Clearly, it really is the uncertainty and the volatility — and so that is how clients are feeling globally, domestically. And as part of that, they’re trying to figure out: Is there opportunity in this market?” Racquel Oden at HSBC said at an event. “We’re seeing all these market swings, each day there’s a new report that may pivot things in the economy.”

After piling into short-term Treasuries, anticipating the Fed would start easing policy soon to contain the fallout, traders reversed course. Two-year yields rose for a third consecutive session – the longest run since December – as traders bet policymakers will remain in wait-and-see mode until there’s more clarity on the impacts of tariffs.

“We believe that the longer policy uncertainty persists, the greater the potential hit to economic activity,” said Invesco’s Global Market Strategy Office.

Corporate Highlights:

Palantir Technologies Inc. investors have been betting that the results coming after the markets close on Monday will be another blowout, but the recent run up has given the stock a high bar to clear.

Berkshire Hathaway Inc. followed Chief Executive Officer Warren Buffett’s recommendation, naming Vice Chairman Greg Abel to replace the billionaire as CEO, effective Jan. 1.

Tyson Foods Inc.’s earnings jumped more than expected as increased profits from chicken sales outweighed another quarter of losses at the company’s beef business.

Shell Plc is working with advisers to evaluate a potential acquisition of BP Plc, though it’s waiting for further stock and oil price declines before deciding whether to pursue a bid, according to people familiar with the matter.

Sunoco LP agreed to acquire Parkland Corp., one of the largest owners of gas stations in Canada, for about $9.1 billion including debt.

Investment firm 3G Capital will acquire footwear maker Skechers USA Inc. for $9.4 billion.

Some of the main moves in markets:

Stocks

The S&P 500 fell 0.3% as of 1:15 p.m. New York time

The Nasdaq 100 fell 0.4%

The Dow Jones Industrial Average rose 0.1%

The MSCI World Index fell 0.3%

Bloomberg Magnificent 7 Total Return Index fell 0.6%

The Russell 2000 Index fell 0.3%

Currencies

The Bloomberg Dollar Spot Index fell 0.2%

The euro was little changed at $1.1307

The British pound was little changed at $1.3277

The Japanese yen rose 0.6% to 144.08 per dollar

Cryptocurrencies

Bitcoin fell 1.7% to $94,085.81

Ether fell 1.6% to $1,806.23

Bonds

The yield on 10-year Treasuries advanced five basis points to 4.36%

Germany’s 10-year yield declined two basis points to 2.52%

Britain’s 10-year yield advanced three basis points to 4.51%

Commodities

West Texas Intermediate crude fell 2% to $57.10 a barrel

Spot gold rose 2.2% to $3,311.92 an ounce

–With assistance from Vildana Hajric and Isabelle Lee.

Stocks Trim Drop as Solid Data Spur Bond Losses: Markets Wrap

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