Tech gains fade, US inflation in focus
investmentnews.comStocks and bonds retreated before key inflation readings from the U.S. and China later this week and the earnings season kicks off on Friday.
U.S. stock futures dropped with Europe’s Stoxx 600 benchmark as investors shrugged off tech-led gains that rolled across global markets and drove a Japanese gauge to a 34-year high. Shares and bonds of Spanish blood plasma firm Grifols SA tumbled after short seller Gotham City Research LLC published a report criticizing the company’s financial reporting.
As Monday’s bounce fades, investors are turning to inflation readings and corporate scorecards amid a steady erosion of corporate profits and the highest interest rates in a generation. Federal Reserve Governor Michelle Bowman said inflation could fall toward the central bank’s 2% target with interest rates held at current levels, and offered potential backing for lowering borrowing costs if price pressures fade.
“The new year is already putting the 2023 Santa rally to the test,” said Evelyne Gomez-Liechti, a strategist at Mizuho International, citing pressures including unexpected U.S. labor strength, an overextended rally and heavy supply of new government and corporate debt. At the same time, U.S. 10-year yields are unlikely to breach last week’s highs before the release of the U.S. inflation report on Thursday, she said.
European government bonds slumped before new borrowing from the UK, Netherlands and Austria, with the yield on 10-year British and German benchmarks up at least 5 basis points.
The tech rally in U.S. stocks on Monday came as Nvidia Corp. surged after announcing new artificial-intelligence products for personal computers. The Nasdaq 100 jumped the most since November on Monday and the S&P 500 traded near a
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