Stocks Fall as Wall Street Weighs Inflation and Global Corporate Taxes

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Stocks declined Monday as Wall Street measured inflation risks and what implication a global tax agreement would have on the biggest technology companies in the U.S.

The Dow Jones Industrial Average fell 147 points, or 0.43%, to 34,608, the S&P 500 dipped 0.24% and the Nasdaq was up 0.18% as investors weighed the impact a 15% global corporate tax agreement secured by the G-7 over the weekend would have on the tech giants.

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The G-7 agreement, while certainly historic, must also find approval among recalcitrant leaders of the G-20 before its has any impact on tech giants such as Apple  (AAPL) – Get Report, Alphabet’s  (GOOGL) – Get Report Google, Facebook  (FB) – Get Report and Amazon  (AMZN) – Get Report. That process could take several years. 

Stocks finished higher Friday and tech shares surged after the U.S. added fewer-than-expected jobs to payrolls in May, leading investors to believe the Federal Reserve won’t be paring back its $120 billion of monthly asset purchases anytime soon. The S&P 500 closed at 4,229, just short of a record high.

The Dow gained 0.7% for the week, the S&P 500 rose 0.6% and the Nasdaq added 0.5%.

Wall Street this week will be awaiting Thursday’s report on consumer prices for further signs of inflation risks. The Federal Reserve has argued that any spikes in inflation as the economy recovers from the coronavirus pandemic will be transitory.

Treasury Secretary Janet Yellen said President Joe Biden should push forward with his $4 trillion spending plans even if they cause an inflation spike into next year. She also told Bloomberg in an interview that slightly higher interest rates would be a plus.

“If we ended up with a slightly higher interest rate
environment it would actually be a plus for society’s point of
view and the Fed’s point of view,” Yellen told Bloomberg.

The yield on the benchmark 10-year Treasury was up slightly to 1.57% on Monday.

“So as we hover around record highs, keep in mind that it’s normal for the market to take a bit of a breather as we kick off the week,” said Chris Larkin, managing director of trading and investing product at E*Trade. “And though inflation fears may be on the backburner for now, CPI data out on Thursday could put it back in the spotlight.”

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Biogen  (BIIB) – Get Report was rising Monday after the Food and Drug Administration cleared the company’s aducanumab Alzheimer’s drug.

The approval make aducanumab the first new treatment for Alzheimer’s disease in nearly two decades.

Tesla  (TSLA) – Get Report declined Monday amid lingering concerns over the pace of car sales in China and a move by founder and CEO Elon Musk to pull the plug on the higher-end version of the company’s Model S Plaid sedan.

Bitcoin was down Monday, falling 1.18% to $35,807. The world’s largest cryptocurrency set a record high of more than $64,000 in mid-April.

El Salvador President Nayib Bukele said he was putting together proposed legislation to make Bitcoin legal tender alongside the U.S. dollar in the Central American nation.