Stocks are being weighed down by inflation fears and technological failures.
On Friday, the US and European stock markets mainly fell, pulled down by dismal earnings from Apple and Amazon, as well as news of growing eurozone inflation.
On Thursday, US IT behemoths reported billions of dollars in quarterly earnings, but supply chain bottlenecks, increased pricing, and a global chip shortage hampered results.
US markets closed higher on Thursday, ahead of the Apple and Amazon reports, with the tech-heavy Nasdaq setting a new all-time high.
They retreated at the start of trade on Friday, however the Dow eventually recovered and returned to positive territory.
“Disappointing after-hours earnings from the tech titans countered good momentum from Wall Street’s record finish,” Victoria Scholar, head of investment at Interactive Investor, explained.
On Friday, Asian stock markets were mixed.
The dollar rose against its major competitors, gaining 1% against the euro, as speculation grows that the Federal Reserve will begin tightening monetary policy next week, and US government bond yields rise.
Profits that beat expectations from some of the world’s largest corporations have fueled a rise in global shares this month, easing concerns about rising inflation and the end of the age of central bank generosity.
However, the disappointing earnings from Apple and Amazon, combined with Friday’s eurozone inflation figures, dampened mood heading into the weekend.
Overall, the eurozone economy has maintained its steady recovery from Covid-19 limitations, rising at 2.2 percent in the third quarter of the year, according to data released Friday.
However, Eurostat said on Friday that inflation in the single-currency bloc hit a new high this month as high energy prices rose and supply issues worsened, putting a pall over the recovery from the coronavirus outbreak.
In October, year-on-year inflation reached 4.1 percent, more than double the European Central Bank’s (ECB) objective and tying the previous high of 4.1 percent set in July 2008, according to the agency, as energy costs increased by about a quarter.
“Today’s unexpected increase in EU October CPI to 4.1 percent is yet another reminder of the risks of the ECB’s current ultra-loose monetary policy, and if anything adds to the pressure on a central bank that appears to be in denial as markets price in ever-increasing inflation risks,” said CMC Markets analyst Michael Hewson.
The ECB said on Thursday that the medium-term inflation outlook remains below its 2.0 percent objective, ruling out a rate hike.
Inflation expectations are rising, which is helping to push government bond yields higher. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.