Tech Stocks Rise, Travel Stocks Fall on Reduced Inflation Concerns and Vaccine Anxiety (Update)

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Amid inflation expectations and concerns over Johnson & Johnson (J&J) halting COVID-19 vaccinations, the Nasdaq index rose more than 1%. The S&P 500 index hit an all-time high, while the Dow Jones Industrial Average closed lower.

On the 13th (local time), the Dow fell 68.13 points (0.20%) to 33,677.27, the S&P 500 rose 13.60 points (0.33%) to 4,141.59, and the Nasdaq increased 146.10 points (1.05%) to 13,996.10.

The inflation increase was less than expected, and concerns over worsening vaccination conditions led to gains in tech stocks and declines in cyclical stocks.

The inflation data released that day was not higher than expected, which was seen as easing investors' concerns about interest rate hikes.

The U.S. Department of Labor announced that the Consumer Price Index (CPI) for March rose 0.6% from the previous month. This exceeded the Dow Jones consensus estimate of 0.5% and the prior month’s 0.4% increase. Although this was the largest monthly increase since 2012, the overall assessment was that it was better than expected. The core CPI, excluding energy and food, rose 0.3% month-over-month, surpassing the expected 0.2%, but not enough to stoke inflation fears. Half of the CPI increase was attributed to rising oil prices.

Federal Reserve (Fed) officials also dismissed inflation concerns. Patrick Harker, President of the Philadelphia Fed, stated that inflation is not at an uncontrollable level, so there is time to act. He said, "The economic situation is improving, but the recovery is still in its early stages, and there is no reason to withdraw stimulus yet."

Despite the inflation rise, U.S. Treasury yields reversed and fell. The 10-year Treasury yield dropped 0.056 percentage points from the previous day to 1.62%. This was interpreted as a retracement since inflation concerns had been priced in earlier. Strong demand at the 30-year Treasury auction that day also contributed to rising bond prices.

The decline in Treasury yields led to a weaker dollar and gains in tech stocks. The dollar index, which measures the dollar’s value against major currencies, fell about 0.3% to 91.8.

Among tech stocks, Apple rose 2.4%, and Tesla surged 8.6%, approaching the $800 level. Microsoft, Amazon, and others also showed strength. Altimeter Growth Corp SPAC, which decided to merge with Southeast Asia-focused ride-hailing company Grab, closed up 7.9%.

Vaccine-related stocks showed mixed results. Moderna’s stock rose 7.4%, but J&J’s shares fell 1.3%. Pfizer’s stock increased by only 0.5%.

Cyclical stocks all declined. Airline stocks such as United, Delta, Alaska Airlines, and American Airlines all weakened. Hotel stocks like Marriott and Hilton, casino stocks including MGM, and cruise operators such as Carnival also turned lower together.

West Texas Intermediate (WTI) crude oil prices closed at $60.18 per barrel, up $0.48 (0.8%).

This content was produced with the assistance of AI translation services.