Starting a holiday-shortened week on Monday, U.S. markets fell as investors awaited inflation data. All three major U.S. market indices closed in the red, with the Dow losing the most. The risk of yen intervention and China's government-supported yuan surge weakened the dollar.
Wall Street focused on Boeing (BA.N) opens new tab after CEO Dave Calhoun resigned at year-end over safety worries. "After the best week of the year last week, stocks are taking a breather today, with inflation data coming out later this week," said Carson Group Omaha chief market strategist Ryan Detrick.
"The truth is many are on spring break this week," Detrick said. "We have a holiday right around the corner, so a light-volume consolidation after the big run we've seen is perfectly normal." After the U.S. Federal Reserve left its key policy rate unchanged last Wednesday and its "dot plot" still predicts three cuts this year, markets are looking ahead to Friday's Commerce Department Personal Consumption Expenditures (PCE) report.
Despite Good Friday being a market holiday, the report will be released. After January's 0.3% increase, analysts estimate February's PCE statistics to show inflation rose 0.4%. However, "core" price inflation, which excludes volatile food and energy prices, is expected to fall to 0.3% from 0.4%.
Over the year, headline and core PCE price indices are expected to reach 2.5% and 2.8%, respectively, within one percentage point of the Fed's average annual 2% target. Dow Jones Industrial Average (.DJI) slid 162.26 points, or 0.41%, to 39,313.64, S&P 500 (.SPX) lost 15.99 points, or 0.31%, to 5,218.19, and Nasdaq Composite (.IXIC) sank 44.35 points, or 0.27%, to 16,384.47.
European stocks reversed a slight sell-off to rise nominally as market participants digested dovish central bank attitude. The pan-European STOXX 600 index (.STOXX) climbed 0.04% and MSCI's global stock index (.MIWD00000PUS) fell 0.24%. Emerging stocks fell 0.25 percent. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) down 0.07%, while Japan's Nikkei (.N225) fell 1.16%.
The dollar fell against a basket of international currencies and the yen was little changed as Japan's top currency diplomat warned against speculators weakening the currency, while China's yuan climbed on suspected state-owned bank dollar selling. DXY increased 0.2%, while the euro rose 0.3% to $1.0837. The Japanese yen rose 0.02% to 151.46 per dollar, while Sterling rose 0.27% to $1.2635. Bitcoin was up 11.7% at $70,958 after breaking $70,000.
The $66 billion sale of two-year notes raised Treasury yields as markets adjusted to the Fed reducing interest rates three times this year. Benchmark 10-year notes sank 8/32 to 4.2493% from 4.218% late Friday. The 30-year bond yielded 4.4183%, down 14/32 from 4.392% late Friday. Supply fears from Russian output reduction and geopolitical disputes raised oil prices. US crude increased 1.64% to $81.95 per barrel, while Brent rose 1.55% to $86.75. Gold rose ahead of major U.S. economic data this week. Gold rose 0.3% to $2,170.60 an ounce.
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