GME Stock – Stocks in a Holding Pattern Ahead of U.S. CPI
Stocks were mixed as investors await key economic data out later this week. Tech stocks were outperforming as bond yields fell.
Asian stocks finished mixed, with the
China CSI 300
flat, but South Korea’s
rising nearly 1% after data showed surging factory-gate prices in China. Fresh signs of global inflation come a day ahead of a key update on U.S. consumer prices.
A much sharper-than-expected rise in April prices last month temporarily shook up markets. Investors are waiting to see if strong inflation data will prompt the Federal Reserve to pull back on its accommodative monetary stance, which could turn into a headwind for stocks.
The 10-year Treasury yield slipped to 1.5% on Wednesday, powering the technology-heavy Nasdaq. Lower yields on long-dated bonds boost the value of future cash flows and many tech companies—relying on long-term industry growth trends—are expecting profit growth well into the future. The yield is down from 1.7% hit on May 12 and the Nasdaq is up more than 6% since then.
The recent economic data should, by standard logic, move bond yields higher, though the opposite is happening. Global investors may be rushing in to buy U.S. bonds, while many still don’t see inflation as a lasting dynamic.
“Investors around the globe are starving for yield and relative to every other yield out there in the world, the U.S. is still the highest,” says Stephanie Link, chief investment strategist and portfolio manager at Hightower. Plus, “the bond market believes inflation is transitory.”
China’s producer-price index climbed 9% from a year ago in May, a surge from April’s 6.8% increase, according to data from the National Bureau of Statistics. The gain was higher than the 8.6% increase predicted in a poll of economists from The Wall Street Journal, and was the fastest rise since September 2008.
The jump in prices dented shares of mining stocks in Europe, with
under pressure. The
Stoxx Europe 600 index
added 0.1%, while the
where many of those mining stocks are listed, dropped 0.2%.
Markets will be closely watching Thursday’s European Central Bank monetary-policy decision, particularly to see if the central bank will keep its current pace of bond purchases intact.
(ticker: GME) gained 3%. The videogame retailer and popular meme stock will report results after the market close.
(WISH) stock initially spiked, then swung to a 4% loss. The stock has gotten caught up in the “meme stock” frenzy.
Co. (CL) stock gained 0.4% after getting upgraded to Outperform from Neutral at Credit Suisse.
(CC) stock rose 3.6% after getting upgraded to Buy from Neutral at Goldman Sachs.
Abercrombie & Fitch
(ANF) stock gained 1.3% after getting upgraded to Buy from Hold at Jefferies.
(WEN) stock dropped 11.2% after getting downgraded to Hold from Buy at Stifel.
Write to Jacob Sonenshine at [email protected]