© Reuters. FILE PHOTO: Japanese government candidate for Bank of Japan (BOJ) governor Kazuo Ueda attends a hearing session at the lower house of parliament in Tokyo, Japan February 24, 2023. REUTERS/Issei Kato/File Photo
By Chibuike Oguh
NEW YORK (Reuters) – Global stock markets fell as U.S. Treasury yields rose on Friday after better-than-expected economic data stoked concerns the Federal Reserve would extend its tight rate-raising cycle. interest.
Data from the Commerce Department showed that consumer spending, which accounts for two-thirds of US economic activity, rose 1.8% in January, the biggest increase in nearly two years and topping analyst estimates. , according to a Reuters poll.
In addition, the personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation, accelerated 0.6% last month, the biggest rise in six months, bringing the index to 5, 4% for the 12 months through January.
The strong data deepened the market sell-off in most stocks, and the MSCI World Stock Index, which tracks stocks in 50 countries, lost 1.27%. European stocks were down 0.87%.
“The fact that we have another piece of data that shows the economy is not slowing down enough to give the Fed confidence that they’re dealing with inflation, that’s why the market is bearish.” said Robert Stimpson, fund portfolio manager at Oak Associates in Akron, Ohio.
On Wall Street, all three major indexes fell, led by a sell-off in shares in so-called cyclical sectors, including technology, communication services, consumer discretionary and even healthcare.
The fell 1.01% to 32,817.83, the lost 1.13% to 3,966.91 and the fell 1.68% to 11,395.20.
US Treasury yields rose, with two-year yields hitting 3-1/2-month highs, following the data release.
“The risk to the market is that it was premature in its anticipation of a Fed turnaround. The Fed will continue to raise interest rates more than people think and for longer than people think,” Stimpson added.
Oil prices rose in volatile trade, buoyed by the prospect of lower Russian exports but pressured by rising US inventories and concerns about global economic activity.
Futures were up 0.96% at $83 a barrel, while West Texas Intermediate (WTI) futures gained 1.11% to $76.23.