Stocks, Yields Fall as Reflation Trade Sputters

Stocks declined in the U.S., Europe and Asia as President-elect Joe Biden’s much-anticipated $1.9 trillion Covid-19 relief plan came under scrutiny. The dollar pushed higher and Treasury yields declined.

The S&P 500 fell for a second day, with the energy and financial sectors leading the declines. Optimism about the U.S. aid package had helped spur the so-called reflation trade, but the plan is far from a done deal. Biden’s proposal could be watered down under congressional opposition, and there’s the possibility that some taxes could rise.

Biden’s “American Rescue Plan” includes a wave of new spending, more direct payments to households, an expansion of jobless benefits and an enlargement of vaccinations and virus-testing programs as deaths reach record levels and local governments expand lockdowns.

Stocks
The S&P 500 Index declined 0.2% to 3,785.45 as of 9:33 a.m. New York time.
The Dow Jones Industrial Average fell 0.5% to 30,808.43, the biggest fall in a week.
The Nasdaq Composite Index increased 0.2% to 13,132.75.
The Stoxx Europe 600 Index decreased 0.8% to 408.60, the biggest dip in three weeks.
The MSCI All-Country World Index fell 0.5% to 658.49.

Currencies
The Bloomberg Dollar Spot Index climbed 0.4% to 1,124.51.
The euro declined 0.3% to $1.2115, the weakest in a month.
The British pound declined 0.6% to $1.3613, the biggest fall in a week.
The Japanese yen was little changed at 103.77 per dollar.

Bonds
The yield on 10-year Treasuries fell three basis points to 1.10%.
Germany’s 10-year yield gained one basis point to -0.54%.
Britain’s 10-year yield increased less than one basis point to 0.293%.

Commodities
West Texas Intermediate crude fell 1.5% to $52.82 a barrel, the largest fall in a week.
Gold depreciated 0.2% to $1,843.10 an ounce, the weakest in four weeks.

Stocks, Yields Fall as Reflation Trade Sputters, Bloomberg, Jan 15