Stocks Remain Stuck in Tight Range as Yields Climb: Markets Wrap

(Bloomberg) -- Stock traders remained hesitant to make any big bets ahead of Jerome Powell’s speech on Friday, which may provide clues on how hawkish the Federal Reserve will be in the face of mounting economic challenges.

The S&P 500 alternated between small gains and losses since the opening bell. The tech-heavy Nasdaq 100 slightly outperformed major benchmarks, with Tesla Inc. leading the charge. Elon Musk’s electric-vehicle giant will start trading on a split-adjusted basis on Aug. 25. Treasury 10-year yields traded above 3%, while the dollar resumed its advance.

There’s been no shortage of hawkish Fedspeak in the weeks leading up to the prestigious Jackson Hole, Wyoming annual event that will be attended by policy makers from around the world. The latest such remarks came from Fed Bank of Minneapolis President Neel Kashkari, who said Tuesday that it’s “very clear” that officials need to tighten policy to bring inflation back under control.

“It’s safe to assume one of Powell’s objectives will be to communicate that there remains work to be done to combat inflation and the hiking cycle isn’t nearing its end. At least not yet,” said Ian Lyngen, a strategist at BMO Capital Markets. “In keeping with this theme, Kashkari’s comment that it is ‘very clear’ the Fed needs to tighten monetary policy certainly resonates, and we expect this is just the beginning of a series of such official headlines.”

Economic reports have been mixed at best, underlining the delicate task policy makers face in bringing down high inflation without sparking a recession. Data Wednesday showed US pending home sales fell to the lowest since the start of the pandemic. While orders placed with US factories for core capital goods beat forecasts, the picture might change in the coming months amid higher borrowing costs and uncertainty about the growth outlook.

In corporate news, Peloton Interactive Inc. soared after saying it will sell bikes and certain accessories on Amazon.com Inc. in the US, breaking with a longtime practice of exclusively selling products via its own website and retail stores. Bed Bath & Beyond Inc. jumped after a report said that the home goods retailer has selected a lender to provide financing as it seeks to boost liquidity.

Read: Sell Side Vindicated as Price Targets Reap Alpha: Taking Stock

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What to watch this week:

• US GDP, initial jobless claims, Thursday
• Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
• ECB’s July minutes, Thursday
• Fed Chair Powell speaks at Jackson Hole, Friday
• US personal income, PCE deflator, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.1% as of 10:46 a.m. New York time
• The Nasdaq 100 rose 0.2%
• The Dow Jones Industrial Average was little changed
• The Stoxx Europe 600 rose 0.2%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.3% to $0.9941
• The British pound fell 0.4% to $1.1792
• The Japanese yen fell 0.1% to 136.96 per dollar

Bonds

• The yield on 10-year Treasuries advanced six basis points to 3.10%
• Germany’s 10-year yield advanced six basis points to 1.38%
• Britain’s 10-year yield advanced 11 basis points to 2.69%

Commodities

• West Texas Intermediate crude fell 0.2% to $93.52 a barrel
• Gold futures were little changed

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