WASHINGTON: The dollar hit a 16-month high on Monday, while US stocks fell slightly as investors looked for a clearer economic picture.
Persistent concerns that inflation is rising faster and longer than originally expected weigh on Wall Street, pessimism is weighing on stocks and oil and pushing safe havens like the US dollar upward.
The Dow Jones Industrial Average fell 0.04%, the S&P 500 ended flat, and the Nasdaq Composite fell 0.04%.
The MSCI World Equity Index, which tracks stocks in 45 countries, gained 0.08%.
Investors will likely keep an eye on the latest data on US retail sales on Tuesday, after a report Friday that consumer sentiment hit its lowest point in a decade due to inflation.
“The stock was more or less in a holding pattern today, and after the market ended last week in the red, it may be looking for some direction,” said Mike Lowengart, managing director of investment strategy at E*Trade Financial. “As inflation continues to be the subject of Du Journals, investors will be eyeing earnings and retail sales updates from retailers to give some insight to the consumer and how they are handling pricing pressure.”
Rising Treasury yields also helped propel equity prices, with benchmarks hitting a three-week high as companies delved into debt markets ahead of the holiday stretch.
The 20-year bond yield rose 5 basis points to 2.04% while the 30-year bond yield rose 5 basis points to 2.01%.
The benchmark 10-year yield rose 4 basis points to 1.62% and is up from a one-month low of 1.42% last Tuesday.
Oil prices settled somewhat after ending the day in mixed territory after hitting a one-week low in earlier trading. Crude oil prices were previously pushed down by speculation that President Joe Biden’s administration could tap the US Strategic Petroleum Reserve.
Brent futures fell 12 cents, or 0.2%, to $82.05 a barrel, while US West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, to $80.88.
dollar jump
Investor concerns helped push the US dollar to a 16-month high against key peers on Monday, as its safe-haven position proved attractive in uncertain times.
The dollar index, which measures the currency against six peers, rose to 95.510 on Monday, the highest since July 2020, and was last up 0.398% at 95.394.
The dollar’s jump comes after a surprise report last week that spurred markets on a rise in US inflation, as investors wonder if the Federal Reserve may be forced to raise rates too soon, and if The US consumer will have to consider the higher prices in the long run.
“The resumption of inflation is being driven by unusual supply shocks. “We expect these imbalances to settle by next year, but see inflation continuing and settling at higher levels than pre-COVID,” analysts at BlackRock wrote in an investor note. “Although price increases are broad-based, the mix of inflation shows unusual restart dynamics at play.”
Fellow safe-haven gold surged to a five-month high on the trading day, but eased a touch lower, ending a seven-season winning streak.
Spot gold fell 0.10% to $1,862.24 an ounce.
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