clearn.png
Saturday October 16th, 2021 7:23AM

Stocks fall as investors fret over jobless claims, inflation

By The Associated Press

Stocks posted modest losses on Thursday as investors had little reason to buy stocks with discouraging economic data and a steady rise in bond yields, which has start to raise concerns about inflation.

The S&P 500 index dropped 17.36 points, or 0.4%, to 3,913.97. It was the third straight decline for the index. The Dow Jones Industrial Average lost 119.68 points, or 0.4%, closing at 31,493.34 and the technology-heavy Nasdaq Composite fell 100.14 points, or 0.7%, to 13,865.36. The Russell 2000 of small companies fell 1.7%, a significant drop for that index.

Energy prices declined for a second day, as the frigid temperatures that impacted Texas and much of the Midwest moved east. Natural gas prices closed down 4.3%. Energy prices have been volatile the past week as record demand for natural gas and other fossil fuels to warm homes has caused electricity prices to skyrocket. Natural gas is typically used as an “on-demand” fuel source to cover increased electrical needs.

Bond yields continue to climb, as murmurs of inflation have started among investors and as the economy continues to climb out of the hole that was created by the pandemic. The yield on the 10-year U.S. Treasury note was at 1.29%, nearly double where it was last fall. It's now trading at levels seen before the March 2020 pandemic shutdowns.

The climb in bond yields has multiple impacts on the market. When bonds pay higher yields, they are more attractive to a broader group of investors, who tend to move money out of low-performing or low dividend-paying stocks and into the steady income of bonds. It's a push-pull phenomenon that's existed in the market for decades. With bonds no longer paying out rock-bottom yields, the inverse relationship between stocks and bonds could be reasserting itself.

Secondly, the bond market tends to be a good predictor for the economy. The steady rise in yields means investors see the economy getting better but it also suggests they're concerned about inflation. President Joe Biden's plan to spend $1.9 trillion on stimulus could be somewhat inflationary, although in a recession, that is not necessarily a bad thing.

Optimism that rollouts of coronavirus vaccines will set the stage for stronger economic growth in the second half of this year has been pushing the stock market higher. But expectations of a post-pandemic recovery also have resurrected concerns over inflation that could prompt governments and central banks to pull back on stimulus down the road in several months or even a year.

The momentum of the stock market, particularly on Thursday, danced closely with the bond market. When bond yields tipped lower in the afternoon, the stock market recovered more than half of its losses from earlier in the day.

“No argument in the market is more important (right now) and more balanced than whether or not we are due for a large spike in inflation,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, in a note to clients.

Energy prices are part of that inflation picture as well. While both natural gas and crude oil prices were down Thursday, energy prices are at levels not seen since before the pandemic. Benchmark U.S. crude oil closed above $60 a barrel, its highest level in a year.

A sign of how painful the U.S. economy remains for many Americans, and the argument for why additional stimulus is needed, came in this week's jobless claims report. The government reported that applications for jobless benefits rose last week to 861,000. That’s the latest indication that layoffs remain high as coronavirus shutdowns keep many businesses closed.

Minutes from the Federal Reserve’s January policy meeting released Wednesday showed central bank officials believed the pandemic still poses considerable risks to the economy and still support keeping interest rates low in order to boost the economy and help millions of Americans regain lost jobs.

Fed Chairman Jerome Powell has cautioned that inflation could accelerate for a time in coming months as the country opens up. But he and many private economists believe this will be only a temporary rise and not a sign that inflation is getting out of control.

Shares of Dow component Walmart lost 6.5% after reporting weaker results than analysts were expecting.

Shares of GameStop fell 11.4% on Thursday. Congress is conducting a hearing on the recent volatility of these companies, which have been in a tug-of-war between Wall Street institutional investors betting against the companies and the online retail investors who pushed shares higher.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Careers, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services, AP Business - Utilities
© Copyright 2021 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Cruz confirms his Mexican vacation after storm slammed Texas
Texas Sen. Ted Cruz has acknowledged that he had traveled to Mexico for a family vacation this week, leaving his home state as thousands of constituents struggled without power or safe drinking water after a powerful winter storm
1:45PM ( 9 minutes ago )
2 Belarusian journalists sent to prison for covering protest
Two journalists in Belarus have been convicted of violating public order and sentenced to two years in prison for covering a protest against authoritarian President Alexander Lukashenko
1:31PM ( 22 minutes ago )
The Latest: Spain expects more flattening of virus curve
Spanish health officials expect the curve of the coronavirus contagion to continue flattening after the two-week incidence rate per 100,000 inhabitants dropped to 320 cases from its peak of 900 at the end of January
1:31PM ( 23 minutes ago )
Associated Press (AP)
The Latest: Czech Republic lawmakers act to end crisis
The lower house of the Czech Republic's Parliament has approved new legislation that defines the state's responsibilities and rights in fighting the pandemic in a hard-hit European Union country
12:44PM ( 1 hour ago )
Texas power outages below 500,000 but water crisis persists
Power has been restored to more Texans, with fewer than half a million homes still without electricity
12:38PM ( 1 hour ago )
In surprise move, Facebook blocks news access in Australia
Australia’s government has condemned Facebook for its surprise move to prevent Australians from sharing news that also blocked some government communications and commercial pages
12:30PM ( 1 hour ago )
AP Business
Stocks open lower on Wall Street, Treasury yields climb
Stocks are opening broadly lower on Wall Street and Treasury yields continued to climb
9:45AM ( 4 hours ago )
Sign of inequality: US salaries recover even as jobs haven't
Americans as a whole are now earning the same amount in wages and salaries that they did before the virus struck — even with nearly 9 million fewer people working — a stark sign of the economic inequality that has marked the pandemic recession and recovery
11:44AM ( 6 days ago )
Myanmar coup leader: 'Join hands' with army for democracy
Myanmar’s coup leader has used the country’s Union Day holiday to call on people to work with the military if they want democracy, a request likely to be met with derision by protesters who are pushing for the release from detention of their country’s elected leaders
5:30AM ( 6 days ago )
AP Business - Careers
January home construction falls 6%; signs of rebound ahead
U.S. home construction fell 6% in January but applications for building permits rose sharply
11:29AM ( 2 hours ago )
Myanmar protests focus on junta's economic support
State railway workers in Myanmar are continuing to strike despite a police rampage the previous night targeting them in a sign of the military junta’s concern over growing civil disobedience by public workers protesting the coup
10:58AM ( 2 hours ago )
The Latest: Study suggests London infection rates down
A study from Imperial College London suggests coronavirus infection rates in London have gone down 80% in the past month as lockdown measures curb the spread of the virus
10:45AM ( 3 hours ago )
AP Business - Economy
World shares mostly lower after mixed day on Wall Street
Shares have declined in Europe and Asia after a mixed session on Wall Street, where losses by technology and industrial companies offset other gains
4:45AM ( 9 hours ago )
Asian shares mostly lower after mixed day on Wall Street
Shares are mostly lower in Asia after a mixed session on Wall Street as losses by technology and industrial companies offset other gains
1:41AM ( 12 hours ago )
Italy's Draghi urges unity, courage ahead of confidence vote
Italian Premier Mario Draghi has urged Italy’s polarized politicians to unite behind his new government to help the country confront the coronavirus pandemic and the economic devastation it has wrought
10:14AM ( 1 day ago )
AP Business - Financial Markets
Texas outages below half-million but water crisis persists
Hundreds of thousands of people in Texas are waking up to a fourth day without power
10:01AM ( 3 hours ago )
Outages drop below 1 million in Texas; icy weather goes east
Hundreds of thousands of people in Texas are waking up to a fourth day without power
8:42AM ( 5 hours ago )
The Latest: French President combats cyberattacks
French President Emmanuel Macron unveiled a plan to better arm public facilities and private companies against cybercrimals
7:59AM ( 5 hours ago )
AP Business - Industries
US charges North Korean computer programmers in global hacks
The Justice Department has charged three North Korean computer programmers in a broad range of global and destructive hacks, including targeting banks and a movie studio
9:20PM ( 16 hours ago )
Fed officials expressed concerns in over slowing economy
Federal Reserve officials were convinced last month that the U.S. economy and job growth had slowed as coronavirus cases surged across the country
3:34PM ( 22 hours ago )
CVS posts strong Q4 numbers, but pandemic weighs on results
 CVS Health easily beat fourth-quarter expectations as revenue from COVID-19 testing and prescription growth helped counter hits from the on-going global pandemic
11:22AM ( 2 days ago )
AP Business - Financial Services
California lawmakers propose ban on fracking by 2027
New legislation would ban all fracking in California by 2027, taking aim at the powerful oil and gas industry in the state that's been a leader in combating climate change
7:47PM ( 18 hours ago )
More deadly storms coming so prepare better, experts say
The deadly winter storms that knocked out power for millions in Texas and other states have exceeded the worst-case scenarios of many U.S. utilities
7:35PM ( 18 hours ago )
EXPLAINER: Why the power grid failed in Texas and beyond
The power outages tormenting Texas and other states are exposing weaknesses in an electricity system designed when the weather’s seasonal shifts were more consistent and predictable
7:12PM ( 18 hours ago )
AP Business - Utilities
Cruz confirms his Mexican vacation after storm slammed Texas
Texas Sen. Ted Cruz has acknowledged that he had traveled to Mexico for a family vacation this week, leaving his home state as thousands of constituents struggled without power or safe drinking water after a powerful winter storm
1:45PM ( 9 minutes ago )
2 Belarusian journalists sent to prison for covering protest
Two journalists in Belarus have been convicted of violating public order and sentenced to two years in prison for covering a protest against authoritarian President Alexander Lukashenko
1:31PM ( 22 minutes ago )
The Latest: Spain expects more flattening of virus curve
Spanish health officials expect the curve of the coronavirus contagion to continue flattening after the two-week incidence rate per 100,000 inhabitants dropped to 320 cases from its peak of 900 at the end of January
1:31PM ( 23 minutes ago )
Oilers star McDavid reaches 500 career points 369th NHL game
Edmonton Oilers captain Connor McDavid has joined an elite club
1:23PM ( 30 minutes ago )
WHO says more than 11,000 Ebola vaccines will go to Guinea
The World Health Organization says it will be sending more than 11,000 vaccinations to the West African nation of Guinea in the coming days to help fight against the recent Ebola epidemic declared after emergence in the southern region of N’Zerekore
1:16PM ( 37 minutes ago )