U.S. stocks retreat from record high, dollar near 10-week low

Global shares fall on pandemic fears ahead of U.S. jobs report
Global shares fall on pandemic fears ahead of U.S. jobs report   -   Copyright  Thomson Reuters 2021   -  
By Reuters

<p><body> <p>By Koh Gui Qing</p> <p><span class="caps">NEW</span> <span class="caps">YORK</span> (Reuters) -U.S. stocks fell on Monday and the Dow Jones Industrial Average snapped back from a record high, as worries about accelerating inflation dragged on shares and hobbled the dollar, which struggled at a 10-week low.</p> <p>U.S. equities’ losses deepened as the breakeven rates for U.S. Treasury Inflation-Protected Securities, or <span class="caps">TIPS</span>, scaled multi-year highs, underscoring rising inflation expectations.</p> <p>The Dow Jones Industrial Average lost 0.1% after rising to a record 35,091.56 points earlier in the day. The S&P 500 extended losses to 1%, and the Nasdaq Composite fell 2.55%. [.N]</p> <p>The stocks pullback was mirrored by a broad retreat in riskier assets such as oil and copper, as some investors grew nervous after recent hefty gains.</p> <p>Indeed, copper prices had also shot to an all-time high earlier on Monday as investors piled in on bets of improved demand amid a tightening supply, and driven by the fear that they were missing out on a price rally. [MET/L]</p> <p>Some analysts warned that investor bets on mounting inflation pressure and ensuing interest rate hikes by the Federal Reserve could be overdone.</p> <p>“We see a high bar for the Fed to change its policy stance,” Jean Boivin, head of BlackRock Investment Institute, said, noting a “disconnect” between the market’s pricing for rates to rise as early as next year, and the Fed’s rate projection.</p> <p>For now, Monday’s jump in the breakeven rate for <span class="caps">TIPS</span> was the focus of some investors.</p> <p>Speculation that growing price pressure would erode the dollar’s value kept the U.S. currency near a 2-1/2-month low. By late Monday, the dollar index, which measures the greenback against six major currencies, had pared losses to stand at 90.302. [USD/]</p> <p>A sluggish dollar helped sterling rally to $1.416, the highest since Feb. 25, despite Scotland’s leader saying another referendum on independence was inevitable after her party’s resounding election victory.</p> <p>Rising inflation expectations lifted longer-dated U.S. Treasury yields. The yield on benchmark 10-year Treasury notes stood at 1.6038% after plunging to a two-month low of 1.469% on Friday.</p> <p>Five-year <span class="caps">TIPS</span> rose to 2.72%, its highest since April 2011, following Friday’s 2.681%.</p> <p>The 10-year <span class="caps">TIPS</span> breakeven rate also rebounded after closing at 2.503% on Friday. It was last at 2.54%, its highest since April 2013, indicating the market sees inflation averaging 2.5% a year for the next decade.</p> <p>Oil prices gave up earlier gains as concerns that rising <span class="caps">COVID</span>-19 cases in Asia will dampen demand outweighed expectations that a major U.S. fuel pipeline could restart within the week following a cyber attack. [O/R]</p> <p>Brent crude was little changed at $68.31 per barrel and U.S. crude was also largely flat at $64.91 a barrel. </p> <p>A weaker dollar also helped to boost gold prices. Spot gold rose 0.3% to $1,835.44 per ounce, after touching its highest since Feb. 11 at $1,845.06. [GOL/]</p> <p>The focus now shifts to U.S. consumer price data due on Wednesday, which will help investors determine whether to scale back inflation expectations even further. </p> <p>In the cryptocurrency market, ether pared earlier gains to trade under $4,000. Bigger rival bitcoin fell 4.6 % to $55,667. </p> <p> (Reporting by Danilo Masoni in Milan and Stanley White in Tokyo; editing by Mark Heinrich, Steve Orlofsky and Richard Chang)</p> </body></p>