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Written by Caroline Valetkevitch
NEW YORK (Reuters) – Stock indexes fell sharply on Monday, as U.S. Treasury 10-year-olds touched a 14-month high as a steady U.S. economy and steady inflation spurred Investors gauge the likelihood that the Federal Reserve will stop its tapering cycle.
It hit its highest level in more than two years. The Nasdaq fell, while the benchmark index fell to a two-month low to finish with small gains.
Investors are eagerly awaiting Wednesday’s US Consumer Price Index reading. Any surprise would raise fears that the Fed might stop cutting its rate. A Reuters poll of economists gave the median forecast for annual growth of 2.9%, up from 2.7% in November, and a monthly increase of 0.3%.
US producer price data is expected on Tuesday.
On Friday, the December jobs report showed 256,000 workers were added to US non-farm payrolls, the biggest increase since March and above expectations for an increase of 160,000.
Investors are also worried about whether inflation could arise as a result of tariffs, immigration and tax policies of the incoming administration of President-elect Donald Trump.
Markets are buying about a 27-point rate cut from the Fed this year, with a 52.9% chance of a June cut.
“It’s going to touch and go over the next few days until we get the inflation issues out of the way,” said Peter Cardillo, chief economist at Spartan Capital Securities in New York.
“The Fed has become hawkish at this point,” and investors are weighing the possibility that the US may have seen the end of rate cuts by now, Cardillo added.
The Fed’s next policy meeting is scheduled for Jan. 28-29.
The 10-year yield hit a 14-month high of 4.805% and ended up 1.6 points at 4.79%.
On Wall Street, 358.67 points, or 0.86%, to 42,297.12, the S&P 500 rose 9.18 points, or 0.16%, to 5,836.22 and fell 73.53 points, or 0.38%, to 10.088.
MSCI’s index of global stocks also fell 2.07 points, or 0.25%, to 831.79. The index was down 0.55%.
US fourth quarter earnings reporting season continues this week with results expected from some of the largest US banks including JPMorgan Chase (NYSE: ).
“The question that investors are dealing with is more important – strong corporate earnings, coming from a strong economy, or low prices, coming from a weak economy,” said Oliver Pursche, vice president of president, consultant Wealth Advisors Westport. Connecticut.
“Most investors would prefer a stronger economy with slightly higher prices,” he said.
Helping both the Dow and the S&P 500 was a 3.9% gain in shares of UnitedHealth Group (NYSE: ), President Joe Biden’s administration proposed 2026 reimbursement rates for managed Medicare Advantage plans by private insurers, which would result in a 2.2% increase in premiums.
The , which measures the greenback against a basket of currencies, rose 0.26% to 109.94. Earlier in the session, it rose to its highest level in more than two years, rising to 110.17 and extending its recent rally.
The euro fell by 0.23% to $1.022. Against the Japanese yen, the dollar weakened by 0.03% to
157.64.
Rising energy prices added to investors’ worries about inflation.
Oil prices rose nearly 2% to a four-month high as traders expected that sweeping US sanctions on Russian oil would force buyers in India and China to seek alternative suppliers.
rose $2.25 to settle at $78.82 a barrel and rose $1.25 to settle at $81.01.
As the dollar strengthened, gold fell 0.9% to $2,664.49 an ounce. Gold in general is struggling to compete with investors’ money in a high-yielding, high-dollar environment.
