Technology shares rose as investors focused on growth as nervousness about an acceleration in future U.S. interest-rate increases weighed on global markets.
The benchmark S&P 500 Index fluctuated, while the tech-heavy Nasdaq 100 jumped around 1%, with Apple and Nvidia leading the gains. The Bloomberg Dollar Spot Index rose for a fifth day, the longest winning streak since March 2020. Yields on longer maturity Treasuries retreated after spiking Wednesday.
“Tech doing well is an acknowledgment that GDP growth and strong economic growth is here,” said Mark Stoeckle, chief executive officer at Adams Funds. “It’s outweighing the inflation worries.”
Federal Reserve Chair Jerome Powell acknowledged the risks of inflation and said policymakers had begun a discussion about scaling back bond purchases. Policy makers’ dot plot showed they anticipate two rate increases by the end of 2023, a faster-than-expected pace of tightening. This marked a turning point in the Fed’s communication to global markets, which had so far been ultra-dovish.
While Powell downplayed the risk of any immediate rate increase, some investors interpreted his comments as preparing markets for a hawkish tilt and an eventual tapering. His remarks followed the Fed’s latest projections, which included upward revisions to its outlook for inflation and interest rates.
“2023 is a long way off and I think we’ve already started to see markets stabilize,” said Chris Gaffney, president of world markets at TIAA Bank. “This economic environment is still an excellent environment for companies.”
Elsewhere, CureVac NV plunged as much as 61% in German trading after a study found that its Covid-19 vaccine fell short of targets. The findings, though preliminary, throw the future of the vaccine into question as wealthy nations around the world move swiftly to inoculate their populations with shots already available.
Copper fell in London to the lowest in two months. The rally in metals has stalled in recent weeks and copper has retreated from last month’s record as concerns about cost pressures spurred expectations stimulus that had been supporting the global recovery would be scaled back. Copper producer Freeport-McMoran and Newmont slumped.