Nasdaq plummets 1.3% as stock market falls amid rising bond yields, inflation

A separate report on the Federal Reserve’s industrial production showed a 0.9% increase in January, also defeating economists’ forecasts of a 0.5% gain. Companies replenished their inventories more than expected in December, but a reading on builders’ confidence was stronger than expected.

However, the producer price index jumped 1.3% in January, the biggest increase since the index underwent a major revision in 2009 and service prices were included in the report. The wholesale inflation rate over the past 12 months rose from 0.8% to 1.7% at the end of 2020 – not far from the pre-pandemic level of 2%.

The data is helping to boost US bond yields, as investors also look to the prospect of more fiscal stimulus from Congress and a reduction in coronavirus cases. On Tuesday, note 10 from the Treasury TMUBMUSD10Y,
1.277%
reached a yield close to 1.30%, its highest level since February 26, according to Dow Jones Market Data.

“The retail sales numbers were impressive and the PPI was also very, very strong, but we had a series of casualties before that,” said Peter Andersen, founder of Andersen Capital Management, based in Boston. “It is very difficult to extrapolate based on a month. This could show pent-up demand, but the dynamics of supply and demand at the moment is still very difficult to filter. I am thinking that this could show what is the pent-up demand as soon as we finish launching the vaccine. We will go to the races. “

In an interview with MarketWatch, Andersen said he was “really shocked by the attention that investors are giving to shiny items like Bitcoin, space exploration, SPACs”. The market could use a little bit of direction with more news about the vaccine’s progress, he said, but overall, except for some foamy areas, it is not worrying.

“The markets are showing small losses today, as mild concerns about rising yields on government bonds have encouraged some investors to reduce their exposure to stocks,” said David Madden, market analyst at CMC Markets UK.

“Recently, the mood in global stock markets has been very optimistic with multi-year maximums and, in some cases, maximums for all time have been established,” wrote Madden. “The purchase was being fueled by the hope of further spending stimuli from the Biden government, also entering the mix was the view that successful vaccine launches should help reopen economies and, in turn, economic activity will increase later this year, ”referring to President Joe Biden’s $ 1.9 trillion COVID aid proposal.

Meanwhile, cold weather is causing problems in much of the United States, including Texas, leaving millions without power and nearly 75% of the 48 Lower 48 states covered with snow, wrote The Wall Street Journal, citing the National Oceanic and Atmospheric Administration’s National Snow Analysis. report. Freezing weather cut U.S. oil production and helped drive prices up.

In other economic reports, investors will be watching the minutes of the Federal Reserve’s January policy meeting, to be released at 2 pm, and more clues about how the central bank will react to economic improvement based on increased fiscal spending and the launch of effective vaccines. .

Among the Fed speakers available today, Richmond Federal Reserve Bank Chairman Thomas Barkin is due to speak at 9 am, Boston Fed Chairman Eric Rosengren is due to speak an hour later and Dallas Fed Chairman Robert Kaplan , should speak later on Wednesday, after 18h.

To see: The flight from large cities led to rising prices for suburban homes – Will it survive the pandemic?

What actions are in focus?

• Actions of Verizon Communications Inc. VZ increased 3.7%, and Chevron Corp. CVX rose 3.2% to keep up with Dow after Warren Buffett’s Berkshire Hathaway Inc. BRK.B revealed that it acquired large stakes in the companies during the fourth quarter.

• Canadian cannabis company Sundial Growers Inc. The SNDL filed for a shelf registration with the Securities and Exchange Commission to issue up to $ 1 billion in bonds over time. The shares fell more than 15% at the beginning of the negotiations.

• Medical Device Manufacturer Medtronic PLC MDT said on Wednesday that it is voluntarily removing the unused Valiant Navion chest endoprosthesis system and telling doctors to immediately stop using the device until further notice. The shares fell 1.4%.

• LP of energy transfer ET on Wednesday announced a purchase agreement Enable Midstream Partners LP ENBL in a stock trading valued at $ 7.2 billion.

• Actions of Hilton Worldwide Holdings Inc. HLT fell 1.1% on Wednesday after the hotel operator reported a surprising loss in the fourth quarter and revenue fell more than expected, as the increase in COVID-19 cases and the increase in restrictions travel interrupted the positive momentum seen in summer and autumn.

• Shopify Inc.
  SHOPPING,
  -7.63%
  stocks fell 5.7%, despite better-than-expected quarterly results.

What are other assets doing?

• The yield of the 10-year Treasury note TMUBMUSD10Y,
  1.277%
  fell by almost 3 basis points to 1.289%. Bond yields and prices move in opposite directions.

• The ICE US Dollar Index DXY, a currency measure against a basket of six major rivals, was up 0.5%.

• Oil futures rose as disruptions in the energy sector continued across the country, with the US CL.1 benchmark,
  + 0.35%
  rose 0.2% to $ 60.20 a barrel, exceeding the key level of $ 60. Future gold GC00,
  -1.44%
  dropped 1.2% to about $ 1,778.20 with the increase in bond yields.

• The Stoxx 600 SXXP pan-European index fell 0.4% and London’s FTSE 100 stock index, UKX, fell 0.2%.

• Markets in Hong Kong HSI,
  + 1.10%
  closed 1.1% above, while Japan’s Nikkei 225 index, NIK, fell 0.6%.

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