Stocks Rise, on Track to Snap Three-Day Selloff
May 13 2021 - 02:59PM
Dow Jones News
By Anna Hirtenstein and Akane Otani
U.S. stocks soared Thursday, chipping away at losses after
suffering their worst three-day decline since late October.
The Dow Jones Industrial Average jumped 466 points, or 1.4%, to
34054, lifted by shares of everything from manufacturers to
technology giants. The S&P 500 gained 1.2%, and the Nasdaq
Composite climbed 0.7%.
Thursday's market moves marked a comeback for U.S. stocks after
a jittery start to the week. Signs that inflation may be picking up
faster than expected have put investors on edge, pressuring shares
in the priciest corners of the market. Data earlier this week
showed consumer prices surged higher in April, while a separate
report Thursday showed producer prices posted their biggest annual
jump since the Bureau of Labor Statistics began tracking the data
in 2010.
Investors' primary fear around inflation is that it may chip
into companies' profit margins and force the Federal Reserve to
unwind its easy monetary policies sooner than expected. But so far,
central bank officials have said they expect any jump in inflation
to be transitory. A Fed policy maker on Wednesday said more data
would be necessary for the central bank to begin scaling back its
policies.
In a sign of optimism, technology stocks, among the biggest
decliners in the market selloff earlier in the week, bounced higher
Thursday. Facebook rose 0.7%, while Netflix added 0.3% and Alphabet
gained 1.3%.
"Market selloffs are a good time for people to buy into tech:
for many investors, it's an opportunity to buy something that's
been expensive and get a bit of a discount," said Salman Baig, a
multiasset investment manager at Unigestion. "People are looking
for a place to ride out the storm."
Still, some money managers said they remain wary. The jump in
consumer prices has triggered debates about whether "inflation is
actually more of an issue than we were led to believe, and whether
the Federal Reserve is going to have to be a little bit more
aggressive," said Dwyfor Evans, head of macro strategy for the
Asia-Pacific region at State Street Global Markets.
In another sign that the economy is heating up, data released
Thursday showed jobless claims fell to a new pandemic low last
week. Claims for unemployment benefits have fallen substantially in
recent months, although they remain more than twice as high as
levels seen before the pandemic last spring.
McDonald's said it would raise pay for more than 36,500 hourly
workers by an average of 10% over the next several months,
responding to a shortage of workers across the U.S. Shares rose
1.1%.
In bonds, the market for U.S. Treasurys stabilized after four
consecutive days of selloffs. The yield on the 10-year Treasury
note ticked down to 1.664%, from 1.693% on Wednesday, its highest
level in more than a month. Yields fall when prices rise.
Bitcoin dropped over 8% to around $49,800, according to
CoinDesk, after Tesla Chief Executive Elon Musk said his company
had suspended accepting the cryptocurrency as payment for vehicles
due to its high carbon footprint. It earlier fell as low as
$46,294.72, its lowest price since March 1.
Commodity markets were broadly lower. U.S. crude oil slipped
3.4% to $63.82 after the owner of the Colonial Pipeline said
Wednesday that it had begun restarting operations following a
cyberattack that shut down the main fuel conduit serving the East
Coast.
Overseas, the pan-continental Stoxx Europe 600 fell 0.1%, paring
earlier losses.
Among European equities, Burberry fell 4.2% after reporting a
decline in full-year revenue and a measure of profit. Retail
trading platform Hargreaves Lansdown slid 4.6% after it said it has
started to see a fall in share-dealing volumes as lockdown measures
eased.
In Asia, most major equity benchmarks declined. Hong Kong's Hang
Seng Index lost 1.8%. Indexes in South Korea, Japan, Australia and
China also all retreated. Taiwan's benchmark Taiex shed 1.5%,
declining for a fourth straight day. That put it in correction
territory, meaning it has fallen at least 10% from a recent
high.
In Tokyo, shares in SoftBank Group plunged by more than 7%, even
after the technology investor reported the highest-ever annual
profit for a Japanese company. In a note to clients, Jefferies
analyst Atul Goyal said the lack of a new buyback plan was
disappointing, after SoftBank concluded an earlier program totaling
$23 billion.
-- Xie Yu contributed to this article
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Akane
Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
May 13, 2021 14:44 ET (18:44 GMT)
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