U.S. Stocks Fall Amid Iran Tensions; Dollar Gains: Markets Wrap

(Bloomberg) --

U.S. stocks fell as investors remained wary of an escalation in tensions with Iran. The dollar advanced, while oil continued its retreat from multimonth highs.

The S&P 500 dropped for the second time in three sessions, with investors cautious after Iran threatened a military response to a U.S. airstrike that killed a top general four days ago. Chipmakers buoyed the benchmark.

Havens showed little reaction to the bellicose Iranian rhetoric, with West Texas crude falling below $63 a barrel and gold slightly higher. The dollar advanced versus the yen, while the 10-year Treasury yield rose to 1.82% after indicators pointed to a resilient U.S. economy.

“Markets are to some degree calming down from the trash talk that we’ve seen over the last couple of days,” said Matt Forester, chief investment officer at BNY Mellon’s Lockwood Advisors, about the U.S.-Iran conflict. “The issue is whether there will be heightened conflict in the future. I don’t think markets know yet. This could easily flare back up again.”

Even as investors appeared to have started the first full trading week of 2020 in a defiantly upbeat mood, the unfolding crisis in the Middle East, which triggered a broad sell-off on Friday, returned to the forefront Tuesday. Traders are now waiting to see how Iran fulfills its threats.

Here are some events to watch for this week:

• Federal Reserve officials Richard Clarida, John Williams, James Bullard and Charles Evans speak on Thursday.
• The U.S. monthly employment report is due Friday.

These are moves in major markets:

Stocks

• The S&P 500 Index fell 0.3% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index gained 0.3%.
• The U.K.‘s FTSE 100 Index was little changed.
• The MSCI Asia Pacific Index climbed 0.9%.

Currencies

• The Bloomberg Dollar Spot Index increased 0.3%.
• The euro declined 0.5% to $1.1147.
• The British pound fell 0.4% to $1.3119.
• The Japanese yen decreased 0.2% to 108.53 per dollar.

Bonds

• The yield on 10-year Treasuries rose two basis points to 1.82%.
• Germany’s 10-year yield gained less than one basis point to -0.29%.
• Britain’s 10-year yield added two basis points to 0.792%.

Commodities

• West Texas Intermediate crude dipped 1% to $62.63 a barrel.
• Gold rose 0.3% at $1,574.00 an ounce.

--With assistance from Cecile Gutscher and Yakob Peterseil.

To contact the reporters on this story: Claire Ballentine in New York at cballentine@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, Randall Jensen

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