A pedestrian stands in front of an electronic stock board at a securities firm in Tokyo, Japan. (Photographer: Kiyoshi Ota/Bloomberg)

U.S. Stocks Fall as Dollar Gains; FANG Boosts Tech: Markets Wrap

(Bloomberg) -- Most U.S. equities fell, with financial and commodity shares pacing losses as an overnight rally in Asian equities failed to hold ahead of a spate of key earnings reports this week. The dollar rose to the highest level in two months.

More than three stocks fell for every two that rose in the S&P 500 Index, with banks tumbling the most. Energy producers slumped more than 1 percent as crude traded at a five-week low. The FANG cohort lifted tech-heavy Nasdaq indexes ahead of a spate of megacap earnings later this week. Earlier, the Shanghai Composite Index surged the most since March 2016 in the wake of verbal interventions from authorities.

“This week’s earnings announcements are the bulk of them, so it will be crucial to see what happens, especially to industrials to see whether there’s been any sort of disruption of their business due to the trade disputes,” said John Vail, chief global strategist at Nikko Asset Management.

U.S. Stocks Fall as Dollar Gains; FANG Boosts Tech: Markets Wrap

Risks still abound across global markets, from the continuing U.S.-China trade showdown and tension surrounding the killing of a Saudi journalist to Italian budget fears and President Donald Trump’s unpredictable actions ahead of American midterm elections. Still, equities were attempting to bounce back after a miserable few weeks, and company results from the likes of Amazon, Alphabet, Microsoft and Intel as well as U.S. growth data may provide a welcome stimulus in the coming days.

“It’s early days with under 15 percent of companies having reported [earnings], but the beats have been above average, and margin strength has continued despite some concerns about higher input costs,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “That said, corporate earnings calls have highlighted several potential and real headwinds as we face 2019.”

Italy’s sovereign bonds pared their advance after the nation’s populist government called for a budget dialogue with the European Union to address their differences. The pound retreated as the U.K. blurred more red lines in its Brexit negotiations, heightening the danger to Prime Minister Theresa May.

Elsewhere, commodities were mixed. Gold dropped. The South African rand rallied before the country’s budget.

Terminal readers can read more in our Markets Live blog.

Here are some key events coming up this week:

  • Earnings season gathers pace with notable highlights including Amazon.com, Alphabet, Intel, Verizon, Microsoft, Twitter, McDonald’s, UBS, Deutsche Bank, Barclays, Total, United Technologies, Caterpillar, Halliburton and Linde.
  • Monetary policy decisions are due in Europe, Indonesia, Sweden and Canada.
  • ECB policy makers could on Thursday confirm that asset purchases will end this year, reiterating its pledge to keep interest rates at record lows through summer 2019. President Mario Draghi will hold a press conference.
  • U.S. gross domestic product growth may have slowed in the third quarter, yet remained near its best pace since mid-2015, according to forecasts ahead of Friday’s release.

And these are the main moves in markets:

Stocks

  • The S&P 500 fell 0.4 percent to 2,755.88 as of 4:03 p.m. in New York, while the Dow Jones Industrial Average dropped 0.5 percent to 25,317.48 and the Nasdaq Composite Index gained 0.3 percent to 7,468.63.
  • The Stoxx Europe 600 fell 0.4 percent.
  • The U.K.’s FTSE 100 eased 0.1 percent.
  • Germany’s DAX Index edged 0.3 percent lower.
  • The MSCI Emerging Market Index jumped 1.1 percent.
  • The MSCI Asia Pacific Index increased 0.4 percent.

Currencies

  • The Bloomberg Dollar Spot Index increased 0.3 percent.
  • The euro weakened 0.4 percent to $1.1470.
  • The British pound fell 0.8 percent to $1.2972.
  • The Japanese yen weakened 0.3 percent to 112.83 per dollar.

Bonds

  • The yield on 10-year Treasuries was little changed at 3.19 percent, while the two-year note yield was 2.90 percent.
  • Germany’s 10-year yield fell one basis point to 0.45 percent.

Commodities

  • Crude oil increased was little changed at $69.17 a barrel.
  • Gold dropped 0.4 percent to $1,222.43 an ounce, the first decline in three days.

©2018 Bloomberg L.P.