U.S. Technology Shares Drop, Treasuries Gain: Markets Wrap

(Bloomberg) -- U.S. stocks fell to a two-week low amid renewed selling in technology shares as the Trump administration eyed escalating the trade war and concerns mounted over flagging demand for computer chips. Emerging-market equities flirted with a bear market and Treasuries advanced.

The Nasdaq indexes retreated for a third day, as semiconductor shares paced declines on concern the sector will slow. Selling eased in afternoon trading, sending the Dow Jones Industrial Average to a gain. The S&P 500 ended lower. Facebook dropped a fourth day as the threat of tighter regulation loomed a day after tech executives testified before Congress. Mixed economic data ahead of Friday’s jobs report added to investor concern.

Emerging-market stocks retreated a seventh day, bringing losses from a recent high to almost 20 percent, just below the threshold for a bear market. While Argentine’s peso and Indonesia’s rupiah rose versus the dollar, Russia’s ruble weighed on MSCI’s gauge of developing-nation currencies. Crude oil tumbled below $68 a barrel. The yen strengthened to session highs after the Wall Street Journal reported President Donald Trump may turn his sights on trade with the nation.

“There are many risks out there,” Chris Rupkey, chief financial economist at MUFG Union Bank in New York, wrote in an email to clients. “Emerging markets causing market chaos (forget US stocks are at all time highs and could care less), rising trade tensions threatening long-established world trade patterns and disrupting company supply-chains.”

The weakness in tech shares comes ahead of the key U.S. payroll report that will offer clues on the labor market’s health and the state of wage inflation. For now, emerging economies hold the key to sentiment, with recent losses fueling fears that turmoil could spill into developed markets. While focus remains on efforts from Argentina to Indonesia to sustain confidence, the potential for President Donald Trump to announce another round of tariff hikes on Chinese imports as soon as Thursday also looms large.

Elsewhere, the pound climbed after being whipsawed amid Brexit discussions. Gold advanced with copper. Bitcoin dropped after a report that Goldman Sachs was said to delay setting up a trading desk for cryptocurrencies.

Terminal users can read more in our Bloomberg Markets Live blog here.

Here are some events coming up during the remainder of this week:

• The key monthly U.S. employment report for August is due Friday.

These are the main moves in markets:

Stocks

• The S&P 500 fell 0.4 percent at 4 p.m. in New York.
• The Nasdaq 100 Index dropped 0.9 percent to a two-week low.
• The Stoxx Europe 600 lost 0.6 percent.
• The MSCI All-Country World Index declined 0.4 percent, hitting the lowest in more than two weeks with its sixth consecutive decline.
• The MSCI Emerging Market Index decreased 0.2 percent, reaching the lowest in about 14 months on its seventh straight decline.

Currencies

• The Bloomberg Dollar Spot Index dropped 0.2 percent.
• The euro was little changed at $1.1624.
• The Japanese yen climbed 0.6 percent to 110.9 per dollar, the first advance in a week.
• South Africa’s rand gained 0.7 percent to 15.324 per dollar.
• The MSCI Emerging Markets Currency Index rose 0.1 percent to stop a three-day slide.

Bonds

• The yield on 10-year Treasuries fell three basis points to 2.88 percent.
• The two-year yield lost one basis points to 2.64 percent.
• Germany’s 10-year yield fell three basis points to 0.355 percent.

Commodities

• The Bloomberg Commodity Index fell 0.3 percent.
• West Texas Intermediate crude dropped 1.1 percent to $67.94 a barrel.
• Gold futures added 0.3 percent to $1,205 an ounce.

--With assistance from Brandon Kochkodin and Eddie van der Walt.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Yakob Peterseil

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