U.S. Stocks Drop With Trade, Fed Rates in Focus: Markets Wrap
(Bloomberg) — U.S. stocks fell and Treasuries rose as investors scrutinized any perceived development in the American trade war with China and assessed the impact from a potential slowdown in interest-rate hikes. Political intrigue also garnered investor attention.
The S&P 500 briefly pared losses after President Donald Trump said he’s close to doing “something” with China as he left for the G-20 summit in Buenos Aires. Stocks earlier failed to add to the best rally in eight months, with technology shares leading the weakness. Financial shares were also under pressures as the dovish tone from the Fed chairman Wednesday sent the 10-year Treasury yield to the lowest level in two months.
Major moves in U.S. stocks:
Banks declined, with Goldman Sachs and Morgan Stanley falling more than 1 percent as benchmark rates slid. All of the FAANG cohort fell, with Apple and Netflix dropping more than 1 percent. Abercrombie & Fitch surged 20 percent after sales beat Wall Street’s expectations.
Trade and political developments vied for attention Thursday as Trump heads to Buenos Aires to meet his Chinese counterpart after his former lawyer Michael Cohen pleaded guilty to new crimes related to business dealings in Russia. While the Fed news potentially removed a market overhang, the trade tensions remained a problem for investors concerned that global growth is slowing. At the same time, the Russia investigation threatened to distract the president as he prepared to meet his Chinese counterpart.
“The trade and tariff concern is probably something that is going to persist through 2019. If you do resolve that, if things don’t get worse, then even with that, growth should slow a little bit after this year,” Burns McKinney, a portfolio manager at Allianz Global Investors, said on Bloomberg TV.
In Europe, shares and bonds rose, while the pound fell as U.K. Prime Minister Theresa May raised the prospect of a “ no deal” Brexit. Deutsche Bank AG slid after prosecutors said its headquarters were being searched in a money laundering probe.
Elsewhere, emerging-market equities touched the highest level since early October. West Texas oil rebounded after falling below $50 a barrel for the first time in more than a year before swinging to a gain on reports Russia accepts the need for production cuts.
Trump and Chinese President Xi Jinping plan to meet at the G-20 meeting of world leaders in Argentina that kicks off on Friday. Thursday sees the release of the minutes from the Federal Open Market Committee’s November meeting.These are the main moves in markets:
The S&P 500 Index fell 0.5 percent as of 10:23 a.m. New York time. The Stoxx Europe 600 Index rose 0.4 percent. The U.K.’s FTSE 100 Index gained 0.8 percent. The MSCI Emerging Market Index rose 0.4 percent. The MSCI Asia Pacific Index increased 0.6 percent.
The Bloomberg Dollar Spot Index fell 0.1 percent. The euro climbed 0.1 percent to $1.1376. The British pound declined 0.4 percent to $1.2777. The Japanese yen rose 0.3 percent to 113.32 per dollar.
The yield on 10-year Treasuries fell five basis points to 3.01 percent. Germany’s 10-year yield fell three basis points to 0.32 percent, the lowest in more than 14 weeks. Britain’s 10-year yield dipped three basis points to 1.345 percent, the lowest in more than three months.
West Texas Intermediate crude increased 1.5 percent to $51.04 a barrel. Gold rose 0.2 percent to $1,232.40 an ounce.