(Bloomberg) — U.S. equities fluctuated near record highs and Treasury yields rose as investors weighed inflation risks and the potential impact of a minimum corporate tax that could enable foreign governments to impose levies on big American companies.
The Dow Jones Industrial Average was little changed after briefly climbing above its May 7 closing record, and the S&P 500 swung between small gains and losses, trading within whisker of its all-time high. Losses in megacap tech stocks including Apple Inc., Amazon.com Inc. and Facebook Inc. weighed on the Nasdaq 100. Ten-year U.S. Treasury yields rose from the lowest since late April after Treasury Secretary Janet Yellen said on Sunday a slightly higher interest-rate environment would be a plus.
While resurgent inflation has sparked a debate about when the Federal Reserve will start tapering stimulus, recent data including Friday’s payrolls report seemed to vindicate the central bank’s dovish stance. Investors are trying to strike a balance between preparing for higher rates and riding a risk-on rally underpinned by Fed largesse and Washington’s $4 trillion spending plan. The U.S. consumer-price index report due Thursday will provide more clues.
“The slightly softer-than-expected rise in U.S. payroll employment in May probably won’t change the Fed’s thinking, but another pickup in CPI inflation likely to be reported on Thursday will further spur the taper talk,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, wrote in a note.
Yellen said President Joe Biden should push forward with his spending plans even if they spark inflation that persists into next year. Meanwhile, the Group of Seven rich nations secured a landmark deal that could help countries collect more taxes from big firms and enable governments to impose levies on U.S. giants such as Amazon and Facebook.
Underperformance by the tech-heavy Nasdaq index suggested investors were looking beyond pure growth narratives to sustain gains. European stocks advanced, with carmakers and consumer-products companies outperforming.
Biogen Inc. rallied as the Food and Drug Administration was set to decide on Monday if its Alzheimer’s drug will be approved. Tesla fell after Chief Executive Officer Elon Musk tweeted on Sunday the Model S Plaid+ will be canceled.
Bitcoin rebounded above $36,000 after a roller-coaster ride over the weekend amid a cryptocurrency crackdown in China.
For market commentary, follow the MLIV blog.
Here are key events to watch this week:
Apple holds its annual Worldwide Developers Conference (WWDC) virtually for a second year, to announce new hardware and software and work with developers. Through June 11.European Central Bank decision on Thursday and press conference with President Christine Lagarde.Iran nuclear deal talks reconvene in Vienna Thursday.U.S. consumer price index on Thursday.Group of Seven leaders’ summit starts in Cornwall, England Friday.
These are some of the main moves in markets:
Stocks
The S&P 500 fell 0.1% as of 9:55 a.m. New York timeThe Nasdaq 100 fell 0.2%The Dow Jones Industrial Average was little changedThe Stoxx Europe 600 rose 0.3%The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.2%The euro was little changed at $1.2179The British pound rose 0.1% to $1.4174The Japanese yen rose 0.3% to 109.21 per dollarThe offshore yuan was little changed at 6.3977 per dollar
Bonds
The yield on 10-year Treasuries advanced two basis points to 1.57%Germany’s 10-year yield advanced two basis points to -0.20%Britain’s 10-year yield advanced two basis points to 0.81%
Commodities
West Texas Intermediate crude was little changedGold futures were little changed
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