U.S. stocks fall ahead of expected Fed rate hikes
(Updates to midday U.S. trading)
* Tech, bank stocks drag indexes down
* Treasury yields rise
* Gold, crypto prices also slip
* Oil jumps more than 1%
By Lawrence Delevingne
Aug 19 (Reuters) - U.S. stocks fell and the dollar rose on Friday even as Treasury yields gained, with traders weighing additional interest rate hikes from the Federal Reserve to combat inflation.
With higher rates looming, high-growth and technology stocks such as Amazon.com Inc AMZN.O and Alphabet Inc GOOGL.O fell more than 2%. Banks declined and were on track to end the week lower, potentially snapping their six-week winning streak. And an earnings-miss by heavy equipment maker Deere & Co. DE.N added to the risk-off mood.
The Dow Jones Industrial Average .DJI fell 0.84%, to 33,713.26, the S&P 500 .SPX lost 1.28%, to 4,228.83 and the Nasdaq Composite .IXIC dropped 2%, to 12,704.30.
European shares fell on Friday and posted a weekly loss as the highest-ever jump in German producer prices in July added to gloom over the economic outlook. The pan-European STOXX 600 .STOXX ended 0.8% lower.
The MSCI world equity index .MIWD00000PUS , which tracks shares in 47 countries, was down 1.28%.
"When market participants start to return from their holidays and look back ... they will find central banks still far from having achieved their goals of reining in inflation," ING rates strategists said in a note to clients.
"That means a continued tussle between central bank tightening expectations and recession fears."
The Federal Reserve needs to keep raising borrowing costs to bring high inflation under control, a string of U.S. central bank officials said on Thursday, even as they debated how fast and how high to lift them.
The U.S. dollar benefited from the Fed's hawkish comments and investor caution, hitting a one-month high. The dollar index =USD was up around 0.6% at $108.14 and the euro was down 0.50% at $1.0036 EUR=EBS .
The 10-year U.S. Treasury yield climbed to near a one-month high at 2.9776% US10YT=RR .
Next week, investors will be paying close attention to minutes from the European Central Bank's July meeting, as well as comments by U.S. Federal Reserve Chair Jerome Powell when he addresses the annual global central banking conference in Jackson Hole on Aug. 26.
"Incoming data, on net, suggests the U.S. economy retains fairly healthy momentum," Michael Gapen, a Bank of America economist, wrote in a client note. He cited improving motor vehicle assembly and retail sales data, but noted declining housing numbers.
"Incoming data was not uniformly strong ... and we note that stronger momentum will ultimately be met with additional policy rate firming," Gapen added.
OIL UP, GOLD AND CRYPTO DOWN
Oil prices added a third day of gains. U.S. crude CLc1 rose 1.45% to $91.81 per barrel, while Brent LCOc1 was at $97.59, up about 1% on the day.
Cryptocurrencies fell sharply, with sudden selling dragging bitcoin BTC= to a three-week low. It was last at $21,479, down more than 8% on the day.
Gold was headed for its first weekly drop in a month after hitting a three-week low. Spot gold XAU= fell for a fifth straight session, down about 0.5% at $1,749 per ounce, in what could be its longest losing streak since November 2021.
Global FX performance Link
Global asset performance Link
Reporting by Lawrence Delevingne in Boston and Elizabeth
Howcroft in London; Editing by Kirsten Donovan, Chris Reese and
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.