(Updates prices, adds commentary, adds New York dateline)
U.S. stocks give up some post-Powell gains
In data: U.S. inflation moderates, manufacturing contracts
Dollar sags to lowest since August
Shares in Asia rise as China eases some COVID restrictions
NEW YORK/LONDON, Dec 1 (Reuters) - Wall Street equities
fell on Thursday as investors digested economic data after a big
rally in the previous session from signals the U.S. Federal
Reserve would slow its interest rate hiking pace.
The U.S. dollar fell to its lowest level since August and
Treasury yields sank after Fed Chair Jerome Powell said on
Wednesday that it was time to slow rate hikes. He also signalled
a protracted economic adjustment to higher borrowing costs and
inflation only slowly coming down. He also pointed to a chronic
shortage of workers in the United States.
Oil rose on Thursday on the chance of further supply cuts by
OPEC+ and as easing COVID curbs in China raised the likelihood
of higher demand from the world's top crude importer.
While equity investors cheered signs of moderating inflation
and an increase in U.S. consumer spending in October, risk
appetites dimmed after data showed U.S. manufacturing activity
contracted for the first time in 2-1/2 years in November as
higher borrowing costs weighed on demand for goods.
Still investors saw easing inflation supporting the Fed
chair's indication that rate hikes could slow. In the 12 months
through October, the personal consumption expenditures (PCE)
price index increased 6.0% after advancing 6.3% in September
compared with the Fed's 2% target.
"If inflation keeps coming down, then markets will keep
running higher, as investors will conclude that the Fed wont
need to raise rates as high, or keep them high for as long, as
previously expected," wrote Chris Zaccarelli, chief investment
officer for Independent Advisor Alliance in Charlotte, North
The Dow Jones Industrial Average fell 284.6 points,
or 0.82%, to 34,305.17, the S&P 500 lost 2.01 points, or
0.05%, to 4,078.1 and the Nasdaq Composite added 20.63
points, or 0.18%, to 11,488.63.
The S&P had rallied 3% on Wednesday after Powell's comments
while Nasdaq had gained more than 4% and the Dow had risen 2%.
The pan-European STOXX 600 index rose 0.95% and
MSCI's gauge of stocks across the globe gained
0.76%. Emerging market stocks rose 0.59%.
In currencies, the dollar index fell 0.756%, with the
euro up 0.79% to $1.0487.
The Japanese yen strengthened 1.57% versus the greenback at
135.92 per dollar, while Sterling was last trading at
$1.2264, up 1.73% on the day.
In bonds trading, moderating inflation in October initially
pushed U.S. Treasury yields further down following Wednesday's
Benchmark 10-year notes were down 10.7 basis
points to 3.594%, from 3.701% late on Wednesday. The 30-year
bond was last down 11 basis points to yield 3.7132%,
from 3.823%. The 2-year note was last was down 5.4
basis points to yield 4.3181%, from 4.372%.
Allied with fresh signs that China is looking to relax
COVID restrictions, Asian stocks had closed up 1.36%.
China's factory activity shrank in November as widespread
curbs disrupted manufacturers' output, a private sector survey
showed on Thursday, weighing on employment and economic growth
in the third quarter.
Oil prices rose ahead of the Dec. 4 meeting of the
Organization of the Petroleum Exporting Countries (OPEC) and
allies including Russia, a group known as OPEC+. Though sources
had said on Wednesday that policy change is unlikely, some feel
that a further cut cannot be ruled out.
U.S. crude recently rose 2.84% to $82.84 per barrel
and Brent was at $88.86, up 2.17% on the day.
Spot gold added 1.7% to $1,798.17 an ounce. U.S. gold
futures gained 2.83% to $1,795.40 an ounce.
(Reporting by Sinéad Carew in New York, Marc Jones, Samuel
Indyk and Alun Jogn in London
Editing by Nick Macfie and Lisa Shumaker)