Stocks Tumble, Bonds Climb as Slowdown Fears Mount: Markets Wrap

(Bloomberg) -- U.S. stocks tumbled to the lowest since August as another disappointing report fueled fears that the American economy is slowing. Treasuries climbed with gold and the yen on demand for haven assets.

The S&P 500 suffered its first back-to-back drops of more than 1% this year, pushing its two-day slump to the most in two months, as private payrolls fell short of estimates a day after a manufacturing gauge slumped to the lowest in a decade. The index plunged below 2,900 and took out its average price for the past 100 days, levels it hadn’t breached in a month.

Carmakers sank after quarterly sales reports from Ford and General Motors added to concern over thinning profit margins in the industry. All S&P 500 sectors but one sank more than 1%, with industries most sensitive to economic growth dropping the most. Tech and industrials plunged 2%. The Dow Jones Industrial Average tumbled nearly 500 points.

The hiring numbers pushed the 10-year Treasury yield lower for a fifth straight day as it pushed below 1.6%. The yen rose versus the dollar and gold spiked above $1,500. The equity rout spread to Europe, where the Stoxx 600 saw its biggest slide in 10 months and the FTSE 100 dropped the most since 2016. Oil fell below $53 a barrel after a report showed U.S. crude inventories increased.

The disappointing data out of the U.S. and Europe, as well as weak earnings reports from automakers this week, is forcing investors to reconsider their strategies. The most recent economic numbers are driving concerns that a slowdown, which had been mostly confined to manufacturing, may be spreading to the consumer as the U.S.-China trade war drags on. Those fears increased bets that the Federal Reserve will cut rates this month. Focus now turns to services PMI data on Thursday and the nonfarm payrolls data on Friday.

“In addition to ISM yesterday, you had auto sales data. You had Honda, Toyota, Nissan with double-digit declines. Much worse than expected,” Willie Delwiche, investment strategist at Baird, said by phone. “It raises enough questions about how resilient is the consumer at this point. We haven’t seen enough to say ‘Yeah, the consumer is folding,’ but questions are starting to intensify.”

Here are some key events coming up this week:

• The monthly jobs report is due on Friday.
• Federal Reserve Chairman Jerome Powell is set to speak Friday.
• The Reserve Bank of India sets policy on Friday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index fell 1.8% as of 4 p.m. New York time.
• The Nasdaq Composite Index dropped 1.6%, while the Dow Jones Industrial Average slid 1.9%.
• The Stoxx Europe 600 Index sank 2.7%.
• The U.K.’s FTSE 100 Index sank 3.2%.
• The MSCI Asia Pacific Index dipped 0.4%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%.
• The euro advanced 0.2% to $1.0959.
• The Japanese yen gained 0.5% to 107.19 per dollar.

Bonds

• The yield on 10-year Treasuries decreased four basis points to 1.59%.
• Britain’s 10-year yield climbed three basis points to 0.500%.
• Japan’s 10-year yield dipped two basis points to -0.164%.

Commodities

• West Texas Intermediate crude lost 2% to $52.56 a barrel.
• Gold increased 1.1% to $1,505.60 an ounce.

--With assistance from Sybilla Gross, Adam Haigh, Elena Mazneva, Sophie Caronello and Todd White.

To contact the reporters on this story: Randall Jensen in New York at rjensen18@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, Robert Brand

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