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U.S. technology stocks fell on Monday as investors found more signs of inflationary pressures in the world’s largest economy.
The S&P 500 blue chip closed 1 percent lower, and the technology-focused Nasdaq Composite took a two-day victory to slip 2.6 percent.
U.S. government bonds went on sale, sending higher yields to a longer date. The 10-year Treasury benchmark traded at 1.6 per cent, up roughly 0.03 per cent on the day.
Analysts expect Wednesday’s data to show that US prices rose 3.6% in April compared to the same hour last year. Chinese plant prices, an early indicator of price pressures from Western importers, are projected to fall by more than 6 percent in a report to be released on Tuesday.
Data released on Monday by the U.S. Central Bank’s arms dealership on Monday highlighted that consumers were also covering up for higher prices. According to a recent survey, median inflation expectations for next year Edges to 3.4 percent in April, the highest level since September 2013.
Market measures for inflation expectations have also risen. A well-known gauge, the five-year pairing rate, hit a 15-year high of about 15 points on Monday, up 2.7 percent.
Faith has it he committed As the U.S. economy recovers from the pandemic, it will be quiet with inflation at the 2 percent target. The central bank has stated that it has no plans to reduce its $ 120 billion-a-month bond purchases, which have kept the treasury yields covered, causing global borrowing costs.
But analysts remain concerned that strong inflation for several months will push up bond prices and, as a result, drive yields higher. Rising bond yields step on stock valuations, especially long-term growth shares in the technology sector that do not pay high dividends.
“Will inflation affect market bond yields and the sale of technology? That’s the key story of the market right now,” said Gregory Perdon, chief investment officer at Arbuthnot Latham.
“The Fed can say that inflation is temporary, while the economies are reopening…. That line is starting to get obsolete when major economies like the US reopen and we still have the inflation momentum.”
“It’s a school of thought that will be an orderly and benevolent reflection,” said Yuko Takano, portfolio manager at Newton Investment Management.
Technology stocks have also been pandemic winners, and some analysts believe it will be difficult to maintain current profit growth levels as the blockages ease.
Nasdaq wrapped they were his biggest companies in the last month reported strong first quarter results. On Monday, Citigroup downgraded Facebook and Google’s parent alphabet shares to neutral, saying “growth is likely to decline from the second quarter of this year”. Shares of Facebook fell 4.1 percent on Monday and those of Alphabet were down 2.6%.
“Another cloud in the technology sector is U.S. tax reform,” said Amiri head of U.S. shares Marco Pirondini of Amundi. Joe Biden is the President of the United States pushing a global minimum corporate tax rate to stop multinationals from profiting their profits through low-tax jurisdictions threatens business models of the world’s largest technology companies.
The dollar index, which measures against a group of U.S. currency trading partners, is 0.1 percent lower. The index has fallen 0.8 percent since a report released by the U.S. on Friday much weaker 266,000 new jobs in April than expected.
The pound rose 1 per cent to $ 1.41 as the Conservative party in the UK won the local election and announced further coronavirus reductions. get up from 17 May.
The Chinese renminbi, which is driven by the national central bank, had a three-year high of 6.41.
Elsewhere, Brent’s gross futures stood at $ 68.23 a barrel. The European Stoxx 600 share index ended the session up 0.1%.
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