U.S. Stocks Trapped in Bond and Oil Market Divergence

Barry Adams
16 May, 2022
New York City

U.S. stocks struggled in choppy trading as traders took opposite bets for rising recession prospects and hunted bargains in beaten down sectors. 

The S&P 500 index declined 0.4% to 4,008.03 and the Nasdaq Composite index fell 1.2% to 11,662.79. 

Crude oil advanced 3% to $113.94 a barrel and the yield on 10-year U.S. Treasury notes edged down to 2.884%. 

The indexes opened lower and managed to cross the flat-line in the fifth attempt in the late afternoon but the gains evaporated after sellers overwhelmed buyers in the final hour of trading. 

In choppy trading, investors debated the onset of global slowdown after China reported April retail sales fell 11% and industrial production contracted. 

Moreover, the euro zone growth estimate was lowered in the current and the next year by the European Commission and Germany reported record wholesale price surge since the record keeping began in 1962. 

However the economic worries did not stop companies from launching takeover offers. 

JetBlue launched a tender offer to acquire Spirit Airlines thwarting its merger plan with Frontier Group.  

India's Adani Group agreed to acquire for $10.5 billion stakes in cement companies controlled by Switzerland-based Holcim Limited. 

Carlyle Group agreed to buy the defense contractor ManTech for $4.2 billion. 

European markets traded lower after the European Commission lowered economic growth estimate in the current year to 2.7% from the previous forecast of 4.0% in March and revised lower to 2.3% from 2.7% in 2023. 

Separately, the German statistics agency showed that wholesale inflation perked up to 23.8% in April from 22.6% in March, record increase since 1962 when record keeping began. 

In European trading, the DAX index declined 0.5% to 13,937.77, the CAC-40 index fell 0.2% to 6,348.92, and the FTSE 100 index gained 0.25% to 7,436.98.