(Bloomberg) — U.S. equities slumped as a surge in government bond yields dimmed the appeal of stocks despite the Federal Reserve’s vow to support economic growth.
Telecom companies led declines on the S&P 500 Index. Small-cap shares outperformed the tech-heavy Nasdaq 100 after U.S. regulators said Johnson & Johnson’s Covid-19 vaccine is safe and effective. Tesla Inc. gained after Ark Investment Management’s Cathie Wood said she bought shares during this week’s selloff. Oil and copper advanced. U.S. 10-year yields touched 1.42%, the highest since February 2020.
Equity investors are weighing predictions for a post-pandemic surge in economic activity with concerns that higher interest rates could dent the appeal of stocks. During a volatile session Tuesday, traders seemed to find reassurance in comments from Federal Reserve Chairman Jerome Powell, who called the recent run-up in bond yields “a statement of confidence” in a robust economic outlook.
“There’s definitely a debate going on within the market both in terms of interest rates and inflation, but also in terms of economic growth,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “It’s this whole growth-versus-value investing style discussion that hasppened last year, and now in 2021 I would say it’s been more mixed.”
In Europe, the Stoxx 600 edged higher. Travel shares and construction companies were among the top performers.
Meanwhile, Asian stocks tumbled, led by a retreat in Hong Kong after the city announced its first stamp-duty increase on stock trades since 1993. Mainland-based funds sold a record $2.6 billion worth of Hong Kong stocks through exchange links with Shenzhen and Shanghai. The Hang Seng Index closed down 3%, the biggest retreat in nine months.
Bitcoin climbed back toward $50,000. The rebound follows a tough week for the digital currency after skeptical comments from Microsoft Corp. co-founder Bill Gates and Treasury Secretary Janet Yellen.
Some key events to watch this week:
EIA crude oil inventory report is out Wednesday.Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.
These are some of the main moves in markets:
Stocks
The S&P 500 Index fell 0.1% as of 9:31 a.m. New York time.The Stoxx Europe 600 Index gained 0.1%.The MSCI Asia Pacific Index fell 1.9%.The MSCI Emerging Market Index fell 1.3%.
Currencies
The Bloomberg Dollar Spot Index rose 0.1%.The euro fell 0.1% to $1.2136.The British pound was little changed at $1.4113.The Japanese yen weakened 0.7% to 105.99 per dollar.
Bonds
The yield on 10-year Treasuries jumped eight basis points to 1.42%.Germany’s 10-year yield rose three basis points to -0.29%.Britain’s 10-year yield rose six basis points to 0.78%.
Commodities
West Texas Intermediate crude gained 1.3% to $62.49 a barrel.Gold slid 0.9% to $1,789.93 an ounce.
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