Stocks Edge Up as Worries Around Inflation Abate
U.S. stocks rose on Wednesday morning as investors grew more comfortable that the Federal Reserve and other central banks would maintain their economic support despite a near-term bout of inflation.
Investors had worried that higher inflation would cause Fed officials to dial back the monetary policy that pulled markets back from the Covid-19 selloff last year. While officials in recent days have indicated they may begin discussing scaling back measures, they have stressed that there are no imminent plans to change policy.
“All these signals from the Federal Reserve are that there’s no rush to turn off liquidity,” said Savvas Savouri, chief economist at Toscafund Asset Management.
The growing comfort with the inflation outlook has calmed markets, with the Cboe Volatility Index—Wall Street’s so-called fear gauge, also known as the VIX—dropping Wednesday to 18.41, its lowest level since early May.
Following the opening bell, shares in Urban Outfitters rallied more than 12% after the company reported a profit for its latest quarter as the shopping landscape continued to normalize. Nordstrom shares declined 9.7% after its earnings disappointed investors.
Shares in Dick’s Sporting Goods gained more than 12% after the company boosted its sales growth and profit forecast for its current fiscal year. Build-A-Bear Workshop shares climbed more than 9% after reporting that sales surged in the first quarter.
Meme stocks pushed higher as well, with GameStop adding more than 11% and AMC Entertainment up 8.5%. A new page advertising GameStop nonfungible tokens recently appeared on the videogame retailer’s website, stoking speculation that it may be building digital products that users would have ownership of.
Results are due from Nvidia, Snowflake, Workday, Williams-Sonoma and American Eagle Outfitters after markets close.
Investors are also watching an Exxon Mobil shareholder vote that could influence the company’s carbon strategy in the years ahead.
Bitcoin rose about 4.3% from where it traded Tuesday afternoon to $39,264. Trade in the cryptocurrency has been volatile in May, in part due to concerns that China may boost regulatory efforts against it.
In bond markets, the yield on the 10-year Treasury note ticked down to 1.555% from 1.563% Tuesday. Yields fall when bond prices rise.
European government bond yields ticked lower, with Netherlands 10-year government bonds dropping below zero at minus 0.05%. Dutch bonds went into positive yielding territory for the first time in nearly two years earlier in May.
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The pan-continental Stoxx Europe 600 stock index was down 0.1%.
In Asia, major benchmarks closed after a mixed performance. The Shanghai Composite Index added 0.3% while South Korea’s Kospi declined 0.1%.
New Zealand’s central bank signaled that it might raise a key interest rate in the second half of next year, which could make it one of the first developed markets to reverse Covid-era rate cuts. Kiwi government bonds sold off, with the yield on the benchmark 10-year bond rising as high as 1.901% from 1.789% Tuesday.
–Amber Burton contributed to this article.
Write to Caitlin Ostroff at firstname.lastname@example.org
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Published at Wed, 26 May 2021 14:28:00 +0000