Wall Street focuses on central banks, causes stock fluctuation
- Stocks wobbled as investors observe banks fighting inflation.
- Healthcare companies made gains.
- Crude oil rose but technology companies fell.
Stocks wobbled in afternoon trading on Wall Street Thursday as investors study moves by central banks to fight rising inflation.
The S&P 500 fell 0.4% as of 12:09 p.m. Eastern and is sitting just below the record high it reached last Friday. The Dow Jones Industrial Average rose 96 points, or 0.3%, to 36,023 and the Nasdaq fell 1.8%.
Health care companies and banks made solid gains. Pfizer rose 2.6% and Bank of America rose 2.8%.
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U.S. crude oil prices rose 2.6% and helped send energy stocks higher. Chevron rose 2%.
Technology companies fell and offset gains elsewhere in the market. The sector is full of companies with hefty values and that weight tends to sway the market. Apple shed 2.5%.
Big technology companies have also benefitted greatly from low interest rates making their valuations more attractive. The sector could continue to slip, analysts said, as investors factor in rising interest rates through 2022.
Bond yields fell. The yield on the 10-year Treasury fell to 1.42% from 1.46% late Wednesday.
On Wednesday, the Federal Reserve of the U.S. announced an acceleration of its pullback of economic stimulus as it pivots to fighting inflation. The central bank plans to shrink its monthly bond purchases at twice the pace it previously announced as unemployment falls and inflation nears a 40-year high. The accelerated timetable puts the Fed on a path to start raising rates as early as the first half of next year.
The Bank of England became the first central bank among leading economies to raise interest rates to fight inflation. The European Central Bank still plans to trim its pandemic stimulus, but not abruptly.
Inflation has been a growing concern throughout 2021. Higher raw materials costs and supply chain problems have been raising overall costs for businesses, which have raised prices on goods to offset the impact. Consumers have so far absorbed those price increases, but they are facing persistent pressure from rising prices and that could eventually prompt a pullback in spending. Any pullback in spending could then crimp economic growth.
Wall Street also had several pieces of economic data to review on Thursday.
The number of Americans applying for unemployment benefits rose last week and the figure was bigger than economists expected. The jobless claims, at 206,000, are still low by historical standards.
U.S. industrial production increased 0.5% in November, according to the Federal Reserve, as output at the nation’s factories reached the highest level since January 2019. The figure fell just shy of economists' forecasts.
The Commerce Department reported that new home construction in the U.S. rebounded 11.8% in November as strong demand continues to boost builder confidence even with the slower winter season approaching.