Stocks Fluctuate; Crude Oil Reaches 10-Month High: Markets Wrap

This content was published on January 12, 2021 - 18:57

(Bloomberg) -- U.S. stocks were mixed and benchmark Treasury note yields lingered at 10-month highs as investors mulled the prospects of the economic recovery and vaccine rollout.

The S&P 500 was little changed, with energy and consumer discretionary shares leading gainers. Crude oil approached a 11-month high as the dollar weakened following a three-day rally. Corn futures surged by the exchange limit to the highest level for a most-active contract since May 2014.

The mood across markets wasn’t overly negative as investors assess how the rise in Treasury yields changes the financial landscape. While progress on a vaccine gives reason to be hopeful, there are lingering concerns over the speculative excess and froth that’s driven stock markets to all-time highs in the middle of a pandemic.

“What I think investors are most focused on is the digesting of what is shifting fiscal policy,” said David Bianco, chief investment officer of the Americas at DWS Group. “We’re beginning to lose the anchor on some long-term key benchmark interest rates.”

Treasury 10-year notes pared earlier gains after a government auction of $38 billion of the securities was met with solid demand.

The spread between the rate on the two- and 10-year notes has risen every single day this year as investors bet on additional U.S. fiscal stimulus, spurring more bond issuance and higher yields on longer-maturity Treasuries.

In Washington, the House is set to issue a largely futile ultimatum to Vice President Mike Pence on Tuesday, demanding he invoke constitutional authority to remove President Donald Trump from office, as a prelude to an expected vote to impeach the president for the second time in little more than a year.

“I wrap up the market’s concerns into an easy-to-remember acronym – EIEIO – which stands for EPS-Impeachment-Energy Prices-Interest Rates-Overvaluation,” said CFRA Research Chief Investment Strategist Sam Stovall. “The market is vulnerable to a setback as many measures are at extremes, encouraged by the ‘Blue Ripple’s’ push for additional stimulus.”

Elsewhere, Europe’s Stoxx 600 Index traded little changed. After Bitcoin suffered steep declines on Monday, the largest cryptocurrency continued its wide swings.

In Asia, China’s CSI 300 Index rallied to a 13-year high, driven by a surge in financial and securities stocks. The yuan reached the highest since 2018 versus a basket of trading partners’ currencies on upbeat growth prospects.

Malaysia’s stock benchmark slipped as much as 1.6% after the nation’s king declared a state of emergency until August.

Here are some key events coming up:

  • JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co., as well as firms ranging from Taiwan Semiconductor Manufacturing Co. to Infosys Ltd., are among those due to report earnings.
  • EIA crude oil inventory report is due Wednesday.
  • European Central Bank’s Christine Lagarde speaks at an online conference Wednesday.
  • U.S. consumer-price inflation figures are due Wednesday.
  • U.S. President-elect Joe Biden plans to lay out proposals for fiscal support on Thursday.
  • Fed Chair Jerome Powell takes part in a webinar on Thursday.
  • U.S. initial jobless claims data are due Thursday.
  • U.S. retail sales, industrial production, business inventories and consumer sentiment figures are due Friday.

These are some of the main moves in markets:

©2021 Bloomberg L.P.

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