Tech Stocks Outperform While 10-Year Yield Drops: Markets Wrap

On Oct 13, 2021

(Bloomberg) — Technology shares climbed amid lower Treasury yields after data showing inflation is running hot lifted companies seen as better equipped to pass on higher costs to consumers without harming their businesses.

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Traders also assessed minutes of the Federal Reserve’s latest policy meeting, with officials broadly agreeing they should start reducing pandemic stimulus in mid-November or mid-December. They also saw inflation lasting longer, while still being transitory. Officials discussed an illustrative tapering path featuring “monthly reductions in the pace of asset purchases, by $10 billion in the case of Treasury securities and $5 billion in the case of agency mortgage-backed securities.”

The S&P 500 remained higher, while the tech-heavy Nasdaq 100 outperformed major benchmarks. Ten-year yields traded below 1.6%. The two-year rate — which is more sensitive to policy moves — rose. Delta Air Lines Inc. led losses in U.S. carriers after saying that the increase in jet-fuel prices is a threat to profits.

Read: Inflation Scares Goldman’s Waldron More Than Any Other Risk

Prices paid by U.S. consumers climbed in September by more than forecast, underscoring inflationary pressures. Unprecedented shipping challenges, materials shortages, high commodities prices and rising wages have driven up costs for producers. Many have passed a portion of those costs to consumers — leading to more persistent inflation.

“Wednesday’s still elevated consumer-price index marks about six-months worth of hot inflation data — suggesting that inflation is not as transitory as many investors previously expected,” said Nancy Davis, founder of the Greenwich, Connecticut-based firm Quadratic Capital Management. “The overall inflation story is being driven by supply-chain disruptions and a swift rise in prices, due to the labor shortage.”

Read: Supply-Chain Chatter Hits Record Highs on Earnings Calls

Some corporate highlights:

JPMorgan Chase & Co.’s dealmakers posted their best quarter yet, riding what’s on track to be a record year for mergers and acquisitions. Still, shares fell as consumer and commercial loan growth remained challenged.
American Express Co. and other credit-card issuers tumbled as JPMorgan attributed weakness in its card business to rising costs on marketing and promotions, sparking concern over heightened competition.

Here are a few events to watch this week:

Bank of America Corp., Morgan Stanley and Citigroup Inc. report earnings on Thursday
U.S. initial jobless claims, PPI on Thursday
Goldman Sachs Group Inc. reports earnings on Friday
U.S. business inventories, University of Michigan consumer sentiment, retail sales on Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.1% as of 3:05 p.m. New York time
The Nasdaq 100 rose 0.6%
The Dow Jones Industrial Average fell 0.1%
The MSCI World index rose 0.4%

Currencies

The Bloomberg Dollar Spot…