Stocks Drop on Data, Trade Woes With Fed on Hold: Markets Wrap

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01 Nov 2019, 03:11 AM IST

Stocks Drop on Data, Trade Woes With Fed on Hold: Markets Wrap

The New York Stock Exchange (NYSE) logo is displayed on the trading floor in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

(Bloomberg) --

U.S. stocks fell as weak manufacturing data and renewed concern on trade rattled markets adjusting to the Federal Reserve’s signal that it’s done easing. Treasuries, gold and the yen rose.

The S&P 500 declined after a regional manufacturing gauge missed estimates and jobless claims rose more than forecast. The index was under pressure following a Bloomberg report that Chinese officials have warned they won’t budge on the thorniest trade issues. Apple Inc. and Facebook Inc., two of the four biggest U.S. companies, rose after earnings, preventing steeper losses in the major averages.

In other stock moves:

Kraft Heinz surged after it beat expectations.
Wayfair plunged after its forecast missed.
Hanesbrandes sank on weak earnings.
Twilio tumbled when its sales outlook fell short of predictions.
Twitter eased following a decision to drop political ads.
Facebook rose as much as 5.2% and and Apple added as much as 2.4%.
10 of 11 S&P 500 sectors slumped.

Treasuries extended a rally that began Wednesday after the Federal Reserve cut rates and signaled it won’t consider raising them until inflation picks up. The 10-year yield slipped below 1.75%, as the bond market remains unconvinced the central bank is done easing, pricing in another cut by July. Data showed the Fed’s preferred inflation gauge matched the slowest pace since 2016, while U.S. consumer spending trailed forecasts.

While the Fed’s signal that it won’t rush to raise rates buoyed risk assets Wednesday, the weak economic data and fresh trade uncertainty reminded investors the central bank also has no intention of easing further after three straight cuts.

“There was a lot of complacency building in around trade over the last several weeks and China is reasserting a posture saying we’re not anywhere close to done,” Michael Purves, chief executive officer at Tallbacken Capital Advisors LLC, said by phone. “That’s why the market is off today and Treasuries are rallying. It’s not about some reinterpretation of what Powell said and did yesterday. If Powell is less inclined to underwrite the trade war, then sure that’s a potential risk factor.”

Here are some key events coming up this week:

Earnings include: Exxon Mobil and Macquarie Group on Friday.
Friday brings the monthly U.S. non-farm payrolls report.

These are the main moves in markets:

Stocks

The S&P 500 Index decreased 0.3% as of 4 p.m. New York time.

The Dow Jones Industrial Average fell 0.5%.

The Nasdaq Composite Index lost 0.1%.

The Stoxx Europe 600 Index declined 0.5% to 396.75, the lowest in more than a week on the biggest drop in more than two weeks.

Germany’s DAX Index decreased 0.3% to 12,866.79, the lowest in more than a week on the largest dip in more than three weeks.

Currencies

The Bloomberg Dollar Spot Index fell 0.1% to 1,196.19, the lowest in more than a week.
The Japanese yen rose 0.8% to 107.98 per dollar.
The euro was flat at $1.1152.

Bonds

The yield on two-year Treasuries sank eight basis points to 1.52%, the lowest in more than three weeks on the largest tumble in four weeks.

The yield on 10-year Treasuries sank eight basis points to 1.69%, the lowest in three weeks on the biggest tumble in 11 weeks.

Germany’s 10-year yield decreased five basis points to -0.41%, the lowest in two weeks on the largest tumble in more than five weeks.

Commodities

West Texas Intermediate crude declined 1.8% to $54.10 a barrel, the lowest in more than a week on the biggest drop in more than two weeks.

Gold strengthened 1.1% to $1,512.20 an ounce, the highest in more than five weeks on the largest jump in more than four weeks.

--With assistance from Katherine Greifeld.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@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, Dave Liedtka