Stocks slide, bond yields dip as inflation worries linger

Stocks slide, bond yields dip as inflation worries linger

NEW YORK/LONDON - Global stock markets ended lower on Friday as investors grappled with fears of rising inflation and a surge in coronavirus cases while the dollar edged higher after upbeat U.S. retail sales data reaffirmed an economy in strong recovery mode. The Commerce Department said retail sales rose 0.6% in June, contrary to an expected decline, adding weight to those who say inflation will run faster than the Federal Reserve forecasts and force interest rates to rise sooner than it projects. Yet bond yields pared most initial gains, with the benchmark 10-year U.S. Treasury note trading at 1.2987%, or a scant 0.2 basis points higher on the day. The Fed's dovish outlook outweighed fears of a prolonged inflation spike. Equity markets declined as investors turned risk-averse, with defensive stocks gaining both on Wall Street and in Europe. MSCI's all-country world index, a gauge of global shares, closed down 0.62% at 719.17. The index scaled a record peak earlier in the week, but lost 0.61% by week's end. In Europe, the FTSEurofirst 300 index fell 0.38% to 1,754.64. European defensive shares rose, with real estate, utilities and healthcare up between 0.5% and 1% as worries about the coronavirus mounted. England's