U.S. Stocks Drop as Dollar Climbs With Treasuries: Markets Wrap

(Bloomberg) -- U.S. stocks fell, with an afternoon swoon wiping out early gains for a second straight day, as investors assessed the impact of proposed tax cuts. The dollar rose and industrial metals dropped.

Industrial shares dragged the S&P 500 Index lower, giving it the first three-day slide since August. The tech-heavy Nasdaq 100 Index erased almost all of a rally that had sent it up as much as 1.2 percent as traders weighed the latest developments in efforts to overhaul taxes in the world’s largest economy, including the surprise inclusion of the alternative minimum rate for businesses in the Senate measure. Ten-year Treasury yields slid to 2.35 percent.

Copper’s biggest plunge in almost three years hit mining shares and made Chile’s peso among the worst performing currencies in emerging markets. The euro fell even as indicators showed economic momentum accelerated.

In the U.S., House and Senate lawmakers are poised to begin working on compromise tax-overhaul legislation -- a key step in their drive to send a bill with tax cuts for corporations and individuals to President Donald Trump by the end of the year. A global stock rally that has led indexes to record highs had stalled this month as investors locked in profits in tech stocks, the year’s best performers, and switched to firms seen benefiting most from a potential reduction in the corporate tax rate such as banks.

Elsewhere, oil climbed back toward $58 a barrel before U.S. government data forecast to show crude stockpiles decreased for a third week. The U.S. trade deficit widened in October to a nine-month high on record imports that reflect steady domestic demand. Earlier, indexes fluctuated in Tokyo, while shares in Hong Kong and Shanghai fell even as a report showed China’s service sector expanded more firmly last month than in October.

Terminal customers can read more in our Markets Live blog.

Here are some of the key events facing markets in the coming days:

• The European Commission College of Commissioners discusses Brexit on Wednesday and will likely make its recommendation on whether sufficient progress has been made to move negotiations onto the future relationship.
• The U.S. faces a partial government shutdown after money runs out on Dec. 8 if Congress can’t agree on a spending bill by then.
• U.S. employers probably hired at a robust pace in November as the unemployment rate held at an almost 17-year low. The Labor Department’s jobs report Friday may also show a bump up in average hourly earnings.
• Other countries setting monetary policy this week include Brazil, Canada, and Poland.

These are the main moves in markets:

Stocks

• The S&P 500 Index slipped 0.4 percent at the close of trading in New York.
• The Nasdaq 100 Index was little changed.
• The Stoxx Europe 600 Index closed down 0.2 percent.
• Japan’s Nikkei 225 Stock Average decreased 0.4 percent.
• The MSCI Emerging Market Index sank 0.5 percent.

Currencies

• The Bloomberg Dollar Spot Index increased 0.2 percent.
• The euro declined 0.3 percent to $1.1826.
• The British pound decreased 0.3 percent to $1.3446.
• The Japanese yen fell 0.1 percent to 112.57 per dollar.

Bonds

• The yield on 10-year Treasuries fell two basis points to 2.35 percent.
• Germany’s 10-year yield declined two basis points to 0.32 percent.
• Britain’s 10-year yield fell three basis points to 1.26 percent.

Commodities

• West Texas Intermediate rose 0.3 percent to $57.63 a barrel.
• Gold dipped 0.6 percent to $1,269.50 an ounce, the lowest since Oct. 26.
• The Bloomberg Base Metals 3-Month Price Commodity Index dropped 2.7 percent to the lowest since mid-September.

--With assistance from Hooyeon Kim Vassilis Karamanis Adam Haigh Cormac Mullen and Samuel Potter

To contact the reporters on this story: Brendan Walsh in Austin at bwalsh8@bloomberg.net, Julie Verhage in New York at jverhage2@bloomberg.net.

To contact the editor responsible for this story: Jeremy Herron at jherron8@bloomberg.net.

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