US stocks fell and the dollar strengthened on Thursday after new economic data heightened investor concerns that interest rates will stay longer than previously forecast.
Wall Street’s benchmark S&P 500 opened 0.5 percent lower and the tech-heavy Nasdaq Composite slipped 0.9 percent after US jobless claims fell to 190,000 in the week ended February 25, down from the 195,000 forecast. Tesla’s shares fell 6.9 percent after the company didn’t say when a new model would be launched or what it might cost.
US Treasuries continued to slide, with the yield on the two-year bond — the most inflation-sensitive bond — rising 0.04 percentage point to 4.93 percent, the highest since 2007. The yield on the benchmark 10-year bond rose 0.08 percentage points to 4.07 percent.
A measure of the dollar’s strength against a basket of six peers gained 0.5 percent.
The moves come after a sobering few weeks for investors who had hoped central bank interest rates on both sides of the Atlantic were close to peaking.
“Hiring is in the doldrums,” said Mike Zigmont, head of trading and research at Harvest Volatility Management. “We haven’t had any positive data points or headlines in a while and the wait is weighing on both stocks and bonds.”
Signs of continued tightness in the US job market, raising the likelihood of higher interest rates, followed a smaller-than-expected fall in euro-zone inflation, with prices on the bloc rising 8.5 percent year-on-year in February. That was down from 8.6 percent in January, but more than the 8.2 percent forecast by economists polled by Reuters.
Core inflation, which excludes volatile food and energy to give a clearer picture of underlying price pressures, rose to a new euro-zone record of 5.6 percent, up from 5.3 percent in the previous month. Economists had expected an increase to 5.5 percent.
Stronger-than-expected inflation data from Germany, Spain and France earlier this week meant “the surprise factor has been dampened for a large number in euro-zone-wide numbers,” said Tim Graf, head of European macro strategy at State Street Global Markets.
Europe’s Stoxx 600 rebounded from earlier losses to trade 0.1 percent higher in the early afternoon. London’s FTSE 100 lost less than 0.1 percent.
However, February’s inflation figures are increasing the pressure on the European Central Bank to raise interest rates further in the coming months.
“We forecast a [half percentage point] hike at the [ECB’s] Meeting in two weeks and another in May, but further hikes at later meetings now look increasingly likely,” said Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics.
Separate data released on Thursday showed that the euro-zone unemployment rate was unchanged at 6.7 percent.
Asian markets fell on Thursday as investors reassessed optimism about China’s economic recovery that had boosted equities a day earlier. Hong Kong’s Hang Seng Index slipped 0.9 percent, while Japan’s Topix slipped 0.15 percent and the China CSI 300 fell 0.2 percent.
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