(Bloomberg) — A rout in some of the world’s biggest technology companies dragged down the broader equity market, outweighing gains in companies that stand to benefit the most from an economic rebound.
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The S&P 500 fell after earlier climbing on bets that central banks can move toward tighter policies to fight inflation without derailing the economy. The Nasdaq 100 tumbled, led by losses in giants like Apple Inc. and Tesla Inc. Commodity, financial and industrial shares rose. European equities jumped as the region’s policy makers unveiled a gradual pullback of pandemic stimulus, while the pound gained as the Bank of England unexpectedly raised rates. Bitcoin slumped.
Read: Biden Economic Bill Gets Pushed to 2022 Amid Democrats’ Discord
Central banks are weighing measures to fight price pressures while balancing risks to growth amid coronavirus challenges. European Central Bank President Christine Lagarde unveiled forecasts showing a strong economic rebound along with an outlook for faster inflation. The Federal Reserve said Wednesday it will accelerate the pace at which it tapers bond purchases, and projected rate hikes through 2024.
Comments:
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“Bitcoin and big tech are getting punished today as investors reallocate some of their more profitable risky bets. The growth outlook still remains upbeat for next year” with some traders rotating back into cyclicals, said Edward Moya, senior market analyst at Oanda.
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“While we expect increased stock market volatility as the Federal Reserve embarks on normalizing policy, equity markets should end the year higher as the economy still remains strong, which should lead to continued earnings growth,” said Richard Saperstein, chief investment officer at Treasury Partners.
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“I do think that central banks are being reactive, which is good. If inflation does start to moderate as these major central banks are still expecting, we may actually expect some turn in the policy direction in the later part of next year,” said Janet Mui, investment director at Brewin Dolphin.
Corporate highlights:
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Adobe Inc. forecast revenue for the first fiscal quarter and full year 2022 that fell short of analysts estimates.
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Delta Air Lines Inc. projected it will report a profit this quarter, citing strong demand for travel and a decline in jet-fuel prices.
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Reddit Inc., the social-media platform that helped fuel this year’s meme stock frenzy, said it has confidentially filed for an initial public offering.
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Air France-KLM agreed to buy 100 single-aisle planes from Airbus SE in another major order setback for Boeing Co. — which had supplied aircraft the new jets will replace.
Applications for state unemployment benefits rose last week — but remained near the lowest levels of the pandemic as the labor market recovery continues. U.S. housing starts strengthened in November to the fastest pace in eight months, while output at factories advanced solidly.
Here are some key events this week:
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Bank of Japan monetary policy decision, Friday.
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S&P Dow Jones Indices quarterly rebalance effective after markets close, Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
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The S&P 500 fell 0.5% as of 1:04 p.m. New York time
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The Nasdaq 100 fell 2.2%
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The Dow Jones Industrial Average rose 0.1%
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The MSCI World index was little changed
Currencies
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The Bloomberg Dollar Spot Index fell 0.4%
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The euro rose 0.3% to $1.1319
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The British pound rose 0.4% to $1.3316
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The Japanese yen rose 0.4% to 113.62 per dollar
Bonds
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The yield on 10-year Treasuries declined three basis points to 1.42%
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Germany’s 10-year yield advanced one basis point to -0.35%
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Britain’s 10-year yield advanced two basis points to 0.76%
Commodities
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West Texas Intermediate crude rose 2.2% to $72.42 a barrel
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Gold futures rose 1.9% to $1,798.20 an ounce
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