Stocks Fall, Bonds Rise on U.S. Political Turmoil: Markets Wrap

(Bloomberg) --

Stocks slid as political turmoil in the U.S. whipsawed shares after reports said Democrats would launch a formal impeachment inquiry amid the Ukraine controversy.

The S&P 500 fell the most in a month after it was reported that House Speaker Nancy Pelosi would announce a formal impeachment inquiry of President Donald Trump. The benchmark cut losses earlier in the day after Trump said he would release a complete transcript on Wednesday of his phone call with the Ukrainian president, which is the subject of a congressional investigation and a whistle-blower complaint from an unidentified intelligence official.

A host of other factors also weighed on equities. FAANG stocks -- made up of Facebook Inc., Amazon.com Inc., Apple Inc., Netflix Inc., and Google parent Alphabet Inc. -- fell after Trump made negative remarks about China and the growing power of social media platforms during his speech at the United Nations Tuesday. Weakening consumer confidence added to the gloom.

The 10-year Treasury yield hit a two-week low, while the dollar fell to session lows. The pound gained after the U.K.’s top judges inflicted an unprecedented legal defeat on Prime Minister Boris Johnson, adding to Brexit chaos.

“We’re dealing with a bunch of geopolitical situations and uncertainties,” said Stephen Carl, a trader at Williams Capital Group. “They’re re-highlighting the China trade situation, uncertainties there, that’s coming back into focus. More so today Trump speaking with Ukraine and Iran is in the mix. Domestically Pelosi is potentially talking about impeachment talks. All this coming together in one day today really drove the selling pressure.”

The new impeachment push in the U.S. adds to swirling concerns hovering over global markets. Trump’s speech at the United Nations Tuesday ratcheted up tensions between the U.S. and China, keeping markets on edge ahead of planned high-level talks between the world’s two biggest economies in October. His renewed pressure on some of the biggest American companies sent a jolt through technology indexes.

Meanwhile, underwhelming economic indicators are muddying the picture, with the U.S. consumer showing signs of losing momentum adding to worries. Downbeat numbers from Japan and mixed data from Germany were stark reminders of the fragility of global growth. And political risks loom large for investors, from Brexit to a U.S. Congressional investigation into Trump’s dealings with Ukraine.

Elsewhere, Oil fell on signs Saudi Arabia is making progress in restoring lost output following a drone attack on its facilities.

These are some key events coming up this week:

• Chicago Fed President Charles Evans will discuss the economic outlook and monetary policy in Illinois on Wednesday.
• Decisions are due Wednesday from central banks in New Zealand and Thailand. Thursday brings a monetary policy decision in the Philippines.
• Core PCE -- the Fed’s preferred inflation measure -- is forecast for 1.8%. That’s due Friday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index fell 0.8% as of 4 p.m. New York time.
• The Nasdaq 100 sank 1.4%.
• The Stoxx Europe 600 Index ended virtually unchanged. The DAX Index dropped 0.3% and the FTSE fell 0.5%
• The MSCI Emerging Market Index slid 0.4%.

Currencies

• The Bloomberg Dollar Spot Index slid 0.3%.
• The euro increased 0.2% to $1.1019.
• The British pound jumped 0.5% to $1.2493.
• The Japanese yen rose 0.5% to 107.03 per dollar.

Bonds

• The yield on 10-year Treasuries sank nine basis points to 1.64%.
• The yield on two-year Treasuries declined six basis points to 1.61%.
• Germany’s 10-year yield dropped two basis points to -0.60%.
• Britain’s 10-year yield fell two basis points to 0.528%.
• Japan’s 10-year yield fell three basis points to -0.234%.

Commodities

• West Texas Intermediate crude fell 2.8% to $57.03 a barrel.
• Gold futures rose 0.6% $1,540.40 an ounce.

--With assistance from Yakob Peterseil and Todd White.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, ;Samuel Potter at spotter33@bloomberg.net, Randall Jensen

©2019 Bloomberg L.P.