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Stocks Mixed in Midday Trading as High Base Metal Prices Abet Inflation Concerns

05/10/2021 09:50

01:36 PM EDT, 05/10/2021 (MT Newswires) -- Shares were mixed as a surge in base metal prices added to concerns that a sharp increase in the inflation rate could undermine high growth stocks such as those in the technology sector.

The Dow Jones Industrial Average rose by 0.7% to 35,029.71, while the Nasdaq Composite slumped by 1.5% to 13,552.32. The S&P 500 slipped by 0.1% to 4,228.99. Utilities and consumer staples advanced, leading the gainers, while technology and communication services were among the steepest decliners.

The US 10-year yield rose by 1.1 basis points to 1.59%, clawing back a decline of 1.1 basis points earlier in the session.

Industrial commodities are trading at multi-year highs amid strong demand for metals that are used in the construction industry and manufacturing, a report from Trading Economics said. Iron-ore prices surged by more than 10% past $200 per ton as China entered peak construction season and copper hit new highs as economies across the world move ahead with plans to reopen.

"Commodities never go up in a straight line, unless in extreme periods of forced demand destruction where price action can be explosive to the upside," Goldman Sachs analysts said in a note. "While only a few commodities like corn, steel or lumber have reached that point, steady deficits in most other commodities lead to incremental rallies."

Meanwhile, the Wells Fargo Investment Institute said in a report that "investors should consider a nominal allocation to [Treasury inflation-protected securities] as part of a well-diversified portfolio" as they may help guard a portfolio against a period of higher-than-expected inflation.

S&P 500 leadership stocks such as Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), and Facebook (FB) face the greatest fundamental risk from a potential intervention of regulators, rising interest rates, and upcoming changes in tax policy, according to a research note from Goldman Sachs.

The West Texas Intermediate futures were down by 0.1% to $64.80 intraday, giving up gains earlier in the session following a cyber-attack on the largest US fuel pipeline system, Colonial Pipeline.

In company news, Viatris (VTRS) reported first quarter results in which the company's revenue topped expectations and it reaffirmed 2021 guidance. Shares surged by 9.2% intraday, the most on the S&P 500.

In the precious metals markets, gold was up by 0.5% to $1,841.10, silver was up 0.3% to $27.55 an ounce and copper was down 0.7% to $4.72 per pound.