Stocks rally fizzles, bond markets ponder risks for US economy

Stocks rally fizzles, bond markets ponder risks for US economy

The breather in stocks followed three to four straight days of gains that more than erased losses sustained when Russia invaded Ukraine five weeks ago, and came as bond investors wondered whether the U.S. Federal Reserve's policy tightening could harm the world's biggest economy over the longer term.







Reuters









March 31, 2022 / 06:15 AM IST





The U.S. and European equities rally wavered on Wednesday as investors reviewed economic and geopolitical risks, while oil prices jumped more than $2 on the prospect of more Russian sanctions.

The breather in stocks followed three to four straight days of gains that more than erased losses sustained when Russia invaded Ukraine five weeks ago, and came as bond investors wondered whether the U.S. Federal Reserve's policy tightening could harm the world's biggest economy over the longer term.

A key part of the U.S. yield curve briefly inverted on Tuesday in what is widely viewed as a harbinger of a recession, although it has since reverted.

"We see further equity upside medium-term given a robust growth picture, low bar for first-quarter earnings, and narrowing credit spreads," analysts at JP Morgan's Global Markets Strategy said.

"We see too much