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US stocks move back into black after inflation jitters

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US stocks were back in the black by mid-morning in New York, all but shaking off jitters brought on by data that showed a stronger-than-expected rise in inflation earlier on Wednesday.

The S&P 500, which had declined as much as 0.5 per cent, was up 0.3 per cent to 2,672.29.

Financials and technology both led the benchmark index higher, up about 0.7 per cent each, while real estate and utilities – sectors that act like bond proxies – led the declines, down 1.5 per cent and 0.9 per cent, respectively.

Banks are sensitive to changes in interest rates and are believed to benefit in a higher rate environment as it tends to boost their net interest margin – the difference between the rate banks charge for loans and the yield they pay on deposits – a key driver of profits.

Meanwhile the Dow Jones Industrial Average, which had declined as much as 0.6 per cent, was up 0.1 per cent to 24,670.21 and the Nasdaq Composite, which had declined as much as 0.5 per cent, climbed 0.9 per cent to 7,071.29.

The Iseq, which weakened by close to 0.5 per cent in early trade, was 0.18 per cent stronger by mid-afternoon.

Nervousness
Markets initially turned lower after data on Wednesday morning showed that inflation surpassed expectations for a second straight month, triggering nervousness the uptick in price pressures could force the Federal Reserve to accelerate its pace of tightening. However, investors appeared to shake off those concerns by late morning trade.

Meanwhile, the yield on the US 10-year Treasury, was up 4.2 basis points to 2.871 per cent, while that on the more policy sensitive 2-year was up 4.7 basis points to 2.151 per cent. Yields move inversely to price.

Elsewhere, the dollar index, a gauge of the buck against a basket of peers, was down 0.5 per cent to 89.33.

– Copyright The Financial Times Limited 2018

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