Stocks Fall, Treasuries Rise as Commodities Slump: Markets Wrap

(Bloomberg) -- U.S. stocks fell to a three-week low, while the dollar slumped with Treasury yields as concerns persisted over global growth and the prospects for tax cuts.

The S&P 500 notched its fourth drop in five days, retreating from near session highs in the final half hour of trading on a report that a key Republican opposes the Senate’s latest tax bill. Energy shares led declines as crude continued its slide toward $55 a barrel. A renewed commodities slump overshadowed data showing the U.S. consumer remains robust, while inflation data helped boost bank shares.

The latest batch of data from the U.S. helped ease concern that the world’s economic growth engine was starting to sputter after the flattest yield curve in a decade spooked investors. Stocks still fell partly on the threat that cracks in the market for high-yield debt could spread and on new obstacles to the passage of tax reform. At the same time, weak data out of China stirred anxiety of a slowdown there, sending commodities prices into a tailspin.

Investors had a raft of potential market-moving news to digest Wednesday, as President Donald Trump returned from his 12-day Asia trip to a domestic political landscape buffeted by a Congressional battle over tax cuts and a controversial Senate race in Alabama. The House looks set to vote on its version of the tax plan, while the Senate’s latest version would expand temporary cuts for businesses, boosting optimism among investors.

“When a market wants to move higher, it moves higher, nothing bothers it. But when a market needs to pull back, everything seems to bother it. Every headline bothers it,” Quincy Krosby, chief market strategist at Prudential Financial Inc, said by phone. “That’s where we are right now, but if history is any guide, by history I mean the last eight years, buyers will start to pick up some of the names that they wanted to go into but were waiting for a pullback.”

Terminal users can read more in our Markets Live blog.

Here are some key events investors are watching this week:

• Bank of England officials address the bank’s future on Thursday, while European Central Bank chief Mario Draghi speaks Friday.
• A string of Fed appearances may further illuminate the FOMC’s commitment to a December hike.

And these are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.6 percent to 2,564.71 as of 4 p.m. New York time.
• The Stoxx Europe 600 Index dipped 0.5 percent for its seventh consecutive decline.
• The MSCI All-Country World Index declined 0.4 percent, reaching the lowest in almost three weeks on its fifth consecutive decline.
• The MSCI Emerging Market Index fell 0.6 percent, hitting the lowest in almost three weeks with its fifth consecutive decline.

Currencies

• The Bloomberg Dollar Spot Index fell 0.1 percent, after touching the lowest in almost four weeks.
• The euro was little changed at $1.1797, reaching the strongest in almost four weeks on its sixth consecutive advance.
• The British pound rose 0.1 percent at $1.3175.
• The Japanese yen advanced 0.3 percent to 113.09 per dollar, after touching the strongest in almost four weeks on the biggest increase in almost 10 weeks.

Bonds

• The yield on 10-year Treasuries declined five basis points to 2.32 percent.
• Germany’s 10-year yield dipped two basis points to 0.38 percent.
• Britain’s 10-year yield fell four basis points to 1.286 percent, the largest drop in almost two weeks.

Commodities

• Gold fell 0.1 percent to $1,278.69 an ounce, after touching the highest in almost four weeks on the biggest gain in a week.
• West Texas Intermediate crude fell 0.8 percent to $55.27 a barrel, touching the lowest in almost two weeks.

--With assistance from Cormac Mullen and Sarah Ponczek

To contact the reporter on this story: Randall Jensen in New York at rjensen18@bloomberg.net.

To contact the editor responsible for this story: Jeremy Herron at jherron8@bloomberg.net.

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