Five Things You Need to Know to Start Your Day
U.S. stocks tumbled to their lowest since October 2017 as the Federal Reserve’s meeting nears and investors debate the strength of the global economy and look back on a 2018 filled with trade conflict and geopolitical tensions. Here are some of the things people in markets are talking about.
Stocks in a Bad Way
U.S. equity indexes slid to their lowest close in 14 months as investors weighed the impact of a Federal Reserve hike on growth in an economy already anxious over trade, geopolitical tensions and a possible government shutdown. The S&P 500 Index finished Monday’s session at its lowest since October 2017. The technology, health-care and consumer sectors led the rout, but no segment of the benchmark went unscathed. Insurance stocks plunged after a court ruling jeopardized Obamacare, while Johnson & Johnson sank on fresh worries its asbestos scandal will intensify. And now, the losses look set to spread to Asia. Meanwhile, Chinese holdings of U.S. Treasuries fell to the lowest in a year and a half.
A Rare Hike
Donald Trump’s hectoring aside, it’s exceedingly rare for the Federal Reserve to raise interest rates when stocks are behaving this badly. In fact, were policy makers to follow through with their widely expected hike Wednesday, it would be the first time since 1994 they tightened in this brutal a market. And a chart level that most investors thought would never be tested again in 2018 is shaping up as its best hope after U.S. stocks staged their worst back-to-back declines since October. It’s 2,532.69 on the S&P 500, the intraday bottom touched on Feb. 9, and until Monday the lowest trading level of the year. It was briefly breached in the last 15 minutes before the index finished at 2,546, down 54 points to the lowest level since October 2017.
Commodities Sink, Too
OPEC has its work cut out to persuade the market that its output caps will stabilize oil prices — and U.S. producers aren’t helping matters. Crude settled below $50 a barrel in New York on Monday for the first time in more than a year. The slide began after data provider Genscape Inc. was said to report higher inventories at the biggest American storage hub in Oklahoma and intensified as the U.S. Energy Department forecast higher output for this month and next in the country’s top shale plays. Meanwhile, commodities overall sunk to an 18-month low.
Malaysia Moves Against Goldman
Malaysia is demanding Goldman Sachs Group Inc. bear the brunt of the 1MDB scandal, opening up another legal front for the Wall Street firm over its role raising money for the investment fund. The country filed the first criminal charges against the U.S. bank in the global corruption probe on Monday, after publicly urging Goldman to come to the negotiating table or face litigation. The firm already is in the thick of investigations by U.S. prosecutors and regulators over Goldman’s conduct in the controversy. Malaysian authorities allege that Goldman misled investors when the bank knew that proceeds from 1MDB bond sales it arranged would be misappropriated. The government is seeking fines in excess of both the $2.7 billion of allegedly misused funds and the $600 million in fees received by Goldman on the deals. Goldman has blamed rogue employees for any wrongdoing in relation to 1MDB, a state-owned investment fund.
But for Crypto True Believers…
After one of the worst stretches of losses for cryptocurrencies on record, enthusiasts are taking comfort in a recovery in prices of digital assets including Bitcoin, Ether, EOS and Litecoin. “It seems as though there’s a broad crypto bounce with all main coins up,” David Thomas, director and co-founder at GlobalBlock, said in an email. “It will take a concerted move higher in cryptocurrencies in order to signal an end to the crypto crash.” Greg Tusar, the former global head of electronic trading at Goldman Sachs Group Inc., is excited about digital assets despite the horrific year for crypto. “It feels like being at the early days of trading equities electronically,” said Tusar, who serves as chief technology officer and is a co-founder of Tagomi Holdings. “It’s early stage, there’s a lot of opportunity to build great businesses and have impact.”
What we've been reading
This is what’s caught our eye over the last 24 hours.
- Xi to position himself as a champion of reform in a speech today.
- Women are on track to earn the same as men — in 202 years.
- 14,889,930,106,680 reasons to fear recession.
- Inside the hidden lives of New York’s last aristocrats.
- China’s billionaire factory faces new risks in the Trump era.
- Where the world’s “smart money” made and lost it in 2018.
- How $3.5 trillion of cash is affecting ordinary Japanese.
©2018 Bloomberg L.P.