Concerns over accelerating inflation weighed on stocks on Monday, with the Dow Jones Industrial Average snapping back from a record peak, while the dollar struggled at a 10-week low. Concerns regarding inflationary spillovers pushed up an indicator of inflation expectations to its highest level since 2006.
The rise in raw materials prices is fueling debate ahead of a U.S. CPI study due on Wednesday, which is expected to show a strong increase in April. The pandemic shocks a year ago will amplify the year-on-year reading, but it feeds into a wider market fear that the Federal Reserve will be forced to lift interest rates faster than current guidance suggests to keep inflation in check.
Since rising to 1.60 percent earlier this week, the benchmark 10-year Treasury yield has dropped once again. The yield on 10-year Treasuries dipped about one basis point to 1.59%. Investors punished Big Tech equities during the daily session, pushing both the Dow Jones Industrial Average and the S&P 500 off record highs, sending Nasdaq futures lower on Monday evening.
On Monday, investors sold Apple and Microsoft stocks, causing the Dow Jones Industrial Average and the S&P 500 to fall below their all-time highs. To begin the week, each of those stocks had lost at least 2% of their value.
S&P 500 futures were down 0.6 percent while Dow futures were down 67 points. Nasdaq 100 futures were hit by selling pressure and fell 1%. The Nasdaq Composite took the brunt of the selling, falling 2.5 percent to close at its session low. Facebook is down more than 4%, while Amazon and Netflix are also down more than 3%. After Citigroup downgraded Alphabet, the stock fell more than 2%.
After a ransomware attack forced Colonial Pipeline to shut down the country’s largest fuel pipeline over the weekend, gasoline futures swung back and forth in choppy trading on Monday. Sections of the company’s 5,500-mile grid are being brought back online Monday afternoon, and service is expected to be restored by the end of the week, according to the company.
Gasoline futures were 0.31 percent higher at $2.1334 per gallon at the end of the day. Gasoline futures soared as much as $2.217 during the overnight session, the highest amount since May 2018.
Concerns about rising inflation could prompt the Federal Reserve to alter its interest rate policy. As a result, a rise in interest rates decreases market liquidity, resulting in a drop in stock performance.
