Dollar falls, US stocks fall on inflation fears

A broker looks at a chart on his computer screen on the trading floor of the ICAP in London, Britain, January 3, 2018. REUTERS/Simon Dawson

NEW YORK, April 29 (Reuters) – The U.S. dollar index slid from 20-year highs and Wall Street stocks closed sharply lower on Friday with the latest economic data, a quarterly report and a disappointing outlook for Amazon.com highlighting the rally inflation.

In US Treasuries, the benchmark 10-year yield rose, capping the biggest monthly gain since December 2009 after economic data.

Stocks came under pressure after data showed that monthly inflation rose by the most since 2005 while US consumer spending rose more than expected in March amid strong demand for services. Also, US labor costs in the first quarter rose by the most in 21 years, pointing to rising wage inflation, supporting Fed policy tightening ahead of its scheduled meeting next week. Read more

“With the weekend approaching and the Federal Reserve meeting next week, people are starting to sort things out,” said Peter Toze, chairman of Chase Investments in Charlottesville, Virginia. He also noted disappointing earnings and the Ukraine war.

“It is clear that Russia and Ukraine are increasing the risk factors. It shows no sign of abating,” he said.

Ukrainian President Volodymyr Zelensky said peace talks with Moscow risk collapsing as US lawmakers vowed to move quickly on a plan to send up to $33 billion to help Kyiv continue fighting the Russian offensive. Read more

Ian Lingen, head of US price strategy at BMO Capital Markets, notes that the data could trigger a more hawkish Fed response.

“The operating assumption in the market at the moment is that the Fed has sufficient flexibility to increase the pace of the rally in response to any further acceleration of inflationary pressures,” he said.

Dow Jones Industrial Average (.DJI) It fell 938.99 points, or 2.77%, to 32,977.4 points, the Standard & Poor’s 500 . (.SPX) It lost 155.58 points, equivalent to 3.63%, to 4,131.92 points, and the Nasdaq Composite (nineteenth) It fell 536.89 points, or 4.17%, to 12,334.64 points.

The Nasdaq showed its biggest monthly drop since October 2008.

Pan-European STOXX 600 Index (.stoxx) It rose 0.74% but the MSCI gauge of stocks worldwide (.MIWD00000PUS) Fall 1.88%. On the last trading day of April, the global index was on track for its biggest monthly decline since March 2020.

Amazon (AMZN.O) Shares closed 14% lower after the e-commerce giant delivered a disappointing quarter and forecast late Thursday as it was swamped by rising costs to operate its warehouses and deliver packages to customers. Read more.

Emerging market stocks (MSCIEF) It rose 2.08%.

The Russian ruble hit a two-year high against the dollar and the euro on Friday as capital controls helped it weather another larger-than-expected interest rate cut, and Russia appears to be making last-ditch efforts to avoid a default. Read more

Other emerging market currencies also rose as the dollar weakened.

The dollar looked poised for a six-day collapse against a basket of currencies on Friday although it was still on track for its biggest monthly gain in seven years as concerns about the global economy and a hawkish Federal Reserve boosted demand for the greenback in April. . L2N2WR1KY

The dollar index fell 0.415 percent, with the euro rising 0.47 percent to $1.0543. The Japanese yen rose 0.80% against the dollar at 129.82 per dollar.

The benchmark 10-year US yield, after rising 2.981% on April 20, the highest since December 2018, was looking to post gains for five straight months.

The benchmark 10-year note fell 14/32 to 2.918% from 2.863% late Thursday.

Oil prices tumbled on Friday, falling late in the volatile session, weighed down by the US heating oil contract, which fell more than 20% at some point on the day of its expiration.

US crude oil futures settled at $104.69, down 67 cents, or 0.64%. Brent crude futures settled at $109.34, up $1.7, or 1.63 percent.

Gold prices gave up some gains after rising 1.3% earlier when the dollar slipped and the precious metal was about to end the month lower amid bets of Fed policy tightening. Read more

“The GDP and cost index data for employment data showed that inflation remains fairly high. This is generally supportive of gold,” said Edward Meir, analyst at ED&F Man Capital Markets.

And the spot gold price rose last time 0.1 percent to $ 1895.86 an ounce.

Additional reporting; Editing by Kim Coogle, Chizu Nomiyama, Louise Heavens and Cynthia Osterman

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