Wall Street stocks ticked up in choppy trading on Tuesday, as investors awaited a flurry of US earnings reports that will be scrutinised for signs of strain from high inflation and rising interest rates.
The broad S&P 500 index was up 0.4 per cent by mid-afternoon in New York, while the technology-heavy Nasdaq Composite had added 0.1 per cent.
Those moves in US shares followed four straight sessions of declines, and marked a reversal from falls earlier on Tuesday when the S&P 500 hit its lowest intraday level since November 2020.
Equities have come under pressure in recent days after a US labour market report last week pointed to persistently robust jobs growth in the world’s largest economy, and ahead of a widely anticipated inflation report due on Thursday.
Employment and price growth data have been monitored closely this year for clues about how aggressively the Federal Reserve and its peers will tighten monetary policy. Evidence of a still-hot economy has fuelled concerns that the US central bank will raise interest rates into a recession.
“It’s still that combination of a growth slowdown, sticky inflation and central banks being forced to hike into a slowing economy, which is very negative for markets in general,” said Joost van Leenders, senior portfolio manager at Kempen Capital Management.
The US consumer price index is expected this week to register an annual rise of 8.1 per cent for September, which would mark a slight easing in the rate of inflation from 8.3 per cent in August.
“The expectations are for a marginal slowdown [in inflation],” Leenders added. “That’s not enough for the Fed [to stop raising rates].”
Adding to concerns over the outlook, the IMF on Tuesday warned of “stormy waters” for the global economy, with a growing risk of a global recession next year and a 25 per cent chance that growth would fall below 2 per cent.
Investors were also braced at the start of the week for an upcoming flurry of third-quarter US earnings reports, which will be monitored closely for signs of tension as companies contend with higher prices and escalating borrowing costs.
In a further sign of slowdown fears stalking markets, oil prices turned lower on Tuesday — with international benchmark Brent crude dropping 1.6 per cent to $94.68 a barrel.
In government debt markets, the yield on the 10-year US Treasury note was roughly flat at 3.89 per cent as trading resumed following a one-day holiday.
The equivalent UK bond yield was also roughly flat on the day at 4.44 per cent after the Bank of England widened its emergency bond-buying programme to include inflation-linked gilts in the latest effort to stem “fire sales” by pension funds. The 30-year yield fell 0.03 percentage points to 4.78 per cent.
Bond yields rise as their prices fall.
In Asian equity markets, Hong Kong’s Hang Seng closed 2.2 per cent lower, touching its lowest level since October 2011. Washington last week launched new export controls to restrict Beijing’s plans for technological self-sufficiency, limiting the sales of semiconductors made with US technology unless vendors obtain an export licence.
Additional reporting by William Langley in Hong Kong
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