U.S. Stocks Decline on Tech Woes; Dollar Rallies: Markets Wrap

(Bloomberg) -- U.S. stocks started the week on a sour note, with tech shares tumbling as Apple Inc. faltered on signs of weak iPhone demand. The dollar rose, and the pound slid as the U.K.’s premier fought to save her Brexit divorce plan. Oil gave up early gains.

The S&P 500 Index and Dow Jones Industrial Average finished Monday near session lows. The Nasdaq 100 dropped for the third day and the Russell 2000 small-cap benchmark erased its gains for the year. Major suppliers for Apple also fell as investors fretted about one of the most important product lines in the technology sector, and U.S. chip stocks followed suit.

“The midterm bump was a relief rally that for once the polls were right, but then investors started thinking about what it all really means for fundamentals,” said Max Gokhman, head of asset allocation for Pacific Life Fund Advisors. “It doesn’t mean that much. We’ll keep seeing volatility into year-end, with key milestones being the Trump-Xi meeting at G20, a Brexit treaty, and the December Fed meeting.”

General Electric Co. extended a rout after its chief executive officer’s attempt to reassure investors fell flat. California utilities plunged as wildfires swept the state. Goldman Sachs Group Inc. fell the most since 2011 after Malaysia’s finance minister said the nation would seek a “full refund” over bond deals for its sovereign wealth fund that have landed the company in the midst of corruption probes.

The dollar rallied versus most of its major peers. Crude oil had advanced early as OPEC and its allies started laying the groundwork to cut supply in 2019, but those gains evaporated, with U.S. President Donald Trump tweeting, “Hopefully, Saudi Arabia and OPEC will not be cutting oil production,” and saying prices should be “much lower based on supply!”

The pound declined for a third day as pressure built on U.K. Prime Minister Theresa May to ditch her Brexit plan, while the euro slumped to its weakest level in more than 16 months ahead of more potential stress around Italy’s budget. Italian bonds fell as most euro-zone debt edged higher, while Treasuries didn’t trade because of a U.S. federal holiday.

Investors have a lot on their plate right now, from deciding whether the recent earnings season was a peak to watching Brussels, where the European Commission is ready to escalate a battle with Italy over its budget deficits, and China, which produces key economic data on Wednesday. There’s also a renewed debate on the direction of bond yields -- traders have been dialing down inflation expectations before U.S. consumer price data on Wednesday, which may offer the next clues on the trajectory of borrowing costs.

The Stoxx Europe 600 Index was led downward by tech and personal goods shares. The benchmark gauge in Asia retreated, though stocks in Japan and Hong Kong finished in a tight range and those in China jumped. Emerging-market stocks and currencies fell.

Terminal users can read more in our Markets Live blog.

Coming Up

• U.S. bond markets are closed Monday in observance of Veterans Day
• Tuesday marks the deadline set by the EU for Italy to revise its budget
• Chinese industrial production and retail sales data due Wednesday
• Fed Chairman Jerome Powell on Thursday discusses national and global economic issues with Dallas Fed President Robert Kaplan at an event hosted by the Dallas Fed
• U.S. consumer inflation probably rebounded in October after easing in September. The consumer price index data is projected to show a 0.3 percent increase from the prior month.
• Policy decisions are coming from central banks in Mexico, Philippines, and Thailand

These are the main moves in markets:

Stocks

• The S&P 500 Index fell 2 percent as of 4:02 p.m. New York time.
• The Stoxx Europe 600 Index fell 1 percent, the largest decline in more than two weeks.
• The U.K.’s FTSE 100 Index dipped 0.7 percent.
• The MSCI Emerging Market Index fell 1.1 percent.
• The MSCI All-Country World Index declined 1.6 percent, the biggest drop in almost three weeks.

Currencies

• The Bloomberg Dollar Spot Index increased 0.6 percent to the highest in 18 months.
• The euro fell 0.9 percent to $1.1235, the weakest in almost 17 months.
• The British pound declined 0.9 percent to $1.2854.
• The Japanese yen gained 0.1 percent to 113.77 per dollar.

Bonds

• Italy’s 10-year yield gained four basis points to 3.438 percent, the highest in almost two weeks.
• Germany’s 10-year yield dipped one basis point to 0.40 percent.
• Britain’s 10-year yield fell four basis points to 1.452 percent, the lowest in almost two weeks.

Commodities

• West Texas Intermediate crude fell 2 percent to $58.98 a barrel.
• Copper declined 0.1 percent to $6,049.00 a metric ton.
• Gold dipped 0.7 percent to $1,201.35 an ounce, the weakest in more than a month.

--With assistance from Andreea Papuc, Adam Haigh and Todd White.

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, Andrew Dunn

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