U.S stocks fell yesterday and the Dow Jones Industrial Average snapped back from a record high, as worries about accelerating inflation dragged on shares and hobbled the dollar, which struggled at a 10-week low. U.S equities' losses deepened as the breakeven rates for U.S Treasury Inflation-Protected Securities, or TIPS, scaled multi-year highs, underscoring rising inflation expectations. The Dow Jones Industrial Average lost 0.1% after rising to a record earlier in the day. The S&P 500 extended losses to 1%, and the Nasdaq Composite fell 2.55%. The stock's pullback was mirrored by a broad retreat in riskier assets such as oil and copper, as some investors grew nervous after recent hefty gains. Indeed, copper prices had also shot to an all-time high earlier yesterday as investors piled in on bets of improved demand amid a tightening supply, and driven by the fear that they were missing out on a price rally. Some analysts warned that investor bets on mounting inflation pressure and ensuing interest rate hikes by the Federal Reserve could be overdone.
Dow Jones Industrial Average
The Dow Jones Industrial Average fell 0.10%. The best performers of the session on the Dow Jones Industrial Average were 3M Company, which rose 2.14% or 4.35 points to trade at 207.42 at the close. Meanwhile, Procter & Gamble Company added 1.87% or 2.53 points to end at 137.68 and Verizon Communications Inc. was up 1.36% or 0.80 points to 59.52 in late trade. The worst performers of the session were Intel Corporation, which fell 2.90% or 1.67 points to trade at 56.00 at the close. Visa Inc. Class A. declined 2.65% or 6.15 points to end at 225.97 and Apple Inc. was down 2.57% or 3.35 points to 126.86.
NASDAQ 100
The NASDAQ index lost 2.55%. The top performers on the NASDAQ Composite were Tecnoglass Inc. which rose 30.72% to 16.00, Obalon Therapeutics Inc. which was up 30.00% to settle at 2.860 and Cue Biopharma which gained 27.80% to close at 14.39. The worst performers were Rekor Systems Inc. which was down 27.39% to 13.73 in late trade, Trade Desk Inc. which lost 26.21% to settle at 488.05 and Village Farms International Inc. which was down 24.93% to 8.34 at the close.
Oil
Oil prices fell today on fading fears of a prolonged outage of the largest U.S fuel pipeline system, while India’s coronavirus crisis showed scant signs of easing, with a seven-day average of new cases at a record high. U.S crude futures fell 45 cents, or 0.69%, to $64.47 a barrel, after gaining 2 cents yesterday. Oil was retreating amid weak sentiment as Asian stocks suffered a tech-led selloff and the market shrugged off concerns about a temporary shutdown of the Colonial Pipeline. Colonial Pipeline, which transports more than 2.5 million barrels per day (bpd) of gasoline, diesel and jet fuel, said on Monday it was working on restarting in phases with the goal of substantially restoring operational service by the end of the week. It has begun manually operating its 700,000-barrel-per-day multi-product fuel line between Greensboro, North Carolina, and Maryland for a limited time using existing inventories. Meanwhile, sentiment is weighed down by the rapid spread of coronavirus infections in India.
Precious and Base Metals
Gold held firm near a three-month high yesterday after last week’s miss on the U.S jobs growth numbers weighed on the dollar and bolstered expectations that interest rates will remain low. Spot gold rose 0.4% to $1,836.89 per ounce, after touching its highest since Feb. 11 at $1,845.06. U.S gold futures settled 0.3% higher at $1,837.60. The disappointing U.S. job number ultimately catalyzed a round of algorithmic short-covering. Also supporting the precious metal was the return of discretionary capital flowing into gold alongside strong physical demand from China and India last month prior to Indian lockdowns. U.S nonfarm payrolls data on Friday showed jobs growth unexpectedly slowed in April, pushing the dollar to an over two-month trough, making gold less expensive for holders of other currencies. The lower-than-expected job numbers upset investors’ hopes of a roaring recovery in the world’s largest economy and that the U.S Federal Reserve might tighten policy earlier than expected. The U.S. central bank has pledged to keep interest rates low until inflation and employment pick up. Lower interest rates reduce the opportunity cost of holding non-yielding bullion. What is missing from the recent rise in prices and would be required to revive the rally is the participation of safe-haven seekers. Elsewhere, palladium rose 1.5% to $2,971.39 per ounce after hitting an all-time high last week on supply shortfall worries. UBS raised its end-June and end-September price forecasts for the metal, used mainly in emission-reducing auto catalysts for vehicles, to $3,100 per ounce. Silver eased 0.2% to $27.39 per ounce, while platinum climbed 0.8% to $1,258.87 per ounce. Both metals earlier reached a more than two-month peak.
Traditional Agricultures
Corn futures fell yesterday, pausing after rallying to eight-year highs last week, with traders focusing on the U.S Department of Agriculture’s upcoming world supply-demand (WASDE) report for new price direction. Wheat dipped, supported by beneficial rains across the U.S Great Plains, while soybeans traded mixed on continued tight supplies. USDA is set to issue its first supply and demand estimates for the 2021-22 season on Wednesday.
Disclaimer
This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.
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