Stocks Retreat From Near Record Highs; Bonds Fall: Markets Wrap

U.S. stocks turned sharply lower in the final hour of trading as investors sold some of the rally’s biggest winners amid concern a spending package from Washington is not imminent.

The S&P 500 fell for the first time in eight trading sessions, with some traders citing comments from Senate Majority Leader Mitch McConnell saying stimulus talks are at a stalemate as a catalyst. The Nasdaq 100 fell for a third day. Treasury yields jumped before this week’s debt auctions and gold tumbled the most in seven years.

“There’s some profit taking going on, they’re looking to rotate into some of the stuff that hasn’t performed as well,” said Keith Gangl, portfolio manager for Gradient Investments.

A broad rally from industrial goods to health-care shares sent the Stoxx Europe 600 Index to its best increase in a week. Adding to the earlier optimism was President Donald Trump announcement Monday that he’s considering a tax cut on capital gains, as well as rising hopes for an effective Covid-19 vaccine.

“It seems like a market in the final stages of a rally where investors try and play catch up in the highest beta/most cyclical areas, such as small caps, energy, financials, industrials,” said Sameer Samana, Wells Fargo Investment’s senior global market strategist. “It is a risk-on market, but with a slightly different flavor than the one we saw while real rates and the dollar were declining.”

Elsewhere, the resignation of Lebanon’s government after the devastating explosion in Beirut threatened to upend prospects of a debt restructuring deal in the next few months.

Here are some key events coming up:

  • Earnings include E.ON, Deutsche Telekom, Carlsberg, Tencent and JD.com.
  • New Zealand’s central-bank policy decision is due on Wednesday.
  • U.S. CPI for July is scheduled for Wednesday.
  • China releases a slew of data for July on Friday, including industrial production and retail sales.

These are the main moves in markets:

Stocks

  • The S&P 500 Index dipped 0.8% to 3,333.76 as of 4:01 p.m. New York time, the first retreat in more than a week and the largest decrease in more than two weeks.
  • The Dow Jones Industrial Average dipped 0.4% to 27,688.29, the first retreat in more than a week.
  • The Nasdaq Composite Index dipped 1.7% to 10,782.82, the lowest in more than a week on the largest decrease in more than two weeks.
  • The MSCI All-Country World Index decreased 0.1% to 563.77.

Currencies

  • The Bloomberg Dollar Spot Index increased 0.1% to 1,181.46, the highest in a week.
  • The euro was little changed at $1.1733, the weakest in almost two weeks.
  • The Japanese yen depreciated 0.5% to 106.54 per dollar, the weakest in more than two weeks on the largest fall in more than a week.

Bonds

  • The yield on 10-year Treasuries climbed four basis points to 0.63%, the highest in more than three weeks on the biggest surge in more than two months.
  • Germany’s 10-year yield jumped five basis points to -0.48%, the highest in more than two weeks on the largest surge in almost six weeks.
  • Britain’s 10-year yield jumped seven basis points to 0.2%, the highest in five weeks on the biggest surge in more than four months.

Commodities

  • West Texas Intermediate crude dipped 1% to $41.49 a barrel.
  • Gold depreciated 5.4% to $1,916.58 an ounce, the weakest in more than two weeks on the biggest tumble in more than seven years.
  • Copper decreased 0.6% to $2.84 a pound.

©2020 Bloomberg L.P.

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