Stocks Decline as Trump Cabinet Turmoil Deepens: Markets Wrap

(Bloomberg) -- U.S. equities fell for the second straight day as markets took in Tuesday’s economic and political news. The 10-year Treasury yield fell while the dollar held steady.

While an inflation report reinforced the sense that economic growth is picking up without runaway price increases, energy shares weighed on the S&P 500 Index as oil declined on concern that global demand might not absorb burgeoning U.S. supplies. Retail sales and crude inventory figures due out Wednesday may offer more clues on the future of the economy.

Meanwhile, the sudden firing of U.S. Secretary of State Rex Tillerson -- to be replaced by CIA Director Mike Pompeo -- may have investors waiting for more shoes to drop at the White House, especially when it comes to trade policy.

“We’ve got a new person filling the shoes of the Secretary of State,” said Mike Bailey, director of research at FBB Capital Partners in Bethesda, Maryland. “Although the new person has been around in a different office previously, investors may just be concerned about what is this new person going to do? Could the new Secretary of State be more in line with Trump? Be more inclined towards protectionism?”

Tillerson’s removal followed an executive order from Trump blocking Broadcom Ltd. from acquiring Qualcomm Inc., scuttling a $117 billion hostile takeover that had been the subject of scrutiny on national security grounds. Qualcomm’s shares fell as much as 5.9 percent, weighing down the Nasdaq 100 Index.

The European stock benchmark also faded as its trading session wore on. Earlier, Japanese stocks fluctuated, but they closed higher as Hong Kong and Chinese shares slipped. The yen dropped as investors digested the political fallout from a scandal embroiling the country’s finance minister.

Elsewhere, emerging-market equities gained for a fourth day. Bitcoin held above $9,000. Gold advanced.

Terminal users can read more in our markets blog.

Here are some of the key things happening this week:

• China data on industrial production, retail sales and fixed-asset investment all out on Wednesday are likely to point to slower growth, according to Bloomberg Economics.
• Prices and factory output are focal points in the euro area.
• Also this week, Germany’s Angela Merkel is inaugurated to a fourth term, and EU27 government officials discuss the European Union’s Brexit position.

And these are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.6 percent as of 4 p.m. New York time, its biggest decline in more than a week; the Nasdaq 100 Index fell 1.2 percent.
• The Stoxx Europe 600 Index fell 1 percent, the first retreat in more than a week.
• The U.K.’s FTSE 100 Index declined 1.1 percent, the biggest drop in more than a week.
• The MSCI Emerging Market Index gained less than 0.05 percent.

Currencies

• The Bloomberg Dollar Spot Index gained less than 0.05 percent.
• The euro gained 0.4 percent to $1.2385.
• The British pound climbed 0.4 percent to $1.3959, the strongest in two weeks.
• The Japanese yen decreased 0.1 percent to 106.54 per dollar.

Bonds

• The yield on 10-year Treasuries decreased three basis points to 2.84 percent, the biggest drop in more than a week.
• Germany’s 10-year yield fell one basis point to 0.62 percent, the lowest in almost seven weeks.
• Britain’s 10-year yield dropped one basis point to 1.487 percent.

Commodities

• West Texas Intermediate crude fell 1.2 percent to $60.63 a barrel.
• Gold gained 0.2 percent to $1,325.98 an ounce.
• The Bloomberg Commodity Index gained 0.2 percent.

--With assistance from Brian Chappatta Adam Haigh and Samuel Potter

To contact the reporter on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn, Todd White

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