Monitors display stock market information at the Nasdaq MarketSite in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

Stocks Fall as Cohen and Trade Take Center Stage: Markets Wrap

(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.

Stocks drifted lower after the top U.S. trade negotiator dialed back expectations for a sweeping deal with China and investors fixated on a Congressional hearing about President Donald Trump’s political controversies. The dollar was mixed and bond yields rose.

The S&P 500 and Dow Jones Industrial Average dropped for a second day after U.S. Trade Representative Robert Lighthizer said America is also pushing for “significant structural changes” to the Asian nation’s economic model. Michael Cohen, the president’s former attorney who is facing jail time, said that Trump committed crimes while in office.

“And so hearing what Lighthizer has to say, I think is probably the most important in terms of learning new information for today, rather than obviously just watching Cohen, which is more a political spectacle than anything else,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

Stocks Fall as Cohen and Trade Take Center Stage: Markets Wrap

Equities had been trending lower before Lighthizer’s Congressional comments amid fresh headwinds from disappointing corporate earnings and geopolitical tension in Asia. Japan equities came off their highs and Hong Kong shares erased an advance after Pakistan downed two Indian jets. News of the worst escalation between the two nations since the 1971 war initially boosted the yen and weakened India’s rupee.

Meanwhile, Federal Reserve Chairman Jerome Powell testified for a second day before Congress about monetary policy and the U.S. economy.

Investors have added the India-Pakistan flare-up to a host of uncertainties they’re tracking, from the China trade talks to Brexit, that could rein in a recovery in global equities from December lows. Trump is in Hanoi for a second summit with North Korean leader Kim Jong Un.

The pound, which surged the most in more than three months on Tuesday, added to its gains following a report Wednesday that the European Union will insist on deferring the U.K.’s departure date by up to two years if London and Brussels fail to agree a deal. Oil jumped after a report showed an unexpectedly steep drop in U.S. crude supplies, with total weekly imports falling to the lowest level in more than two decades.

India’s rupee reversed gains and Pakistan’s benchmark stock index plunged more than 3 percent in Karachi before recovering after the latest escalation in tensions. The Pakistani action came a day after India’s Air Force jets bombed what it said was a terrorist training camp inside Pakistan.

Here are some key events coming up:

  • Thursday brings fourth quarter U.S. GDP.
  • U.S. personal income and sending data is released Friday.

These are the main moves in markets:

Stocks

  • The S&P 500 Index fell less than 0.1 percent as of 4:05 p.m. New York time, while the Nasdaq Composite Index rose less than 0.1 percent and the Dow Jones Industrial Average declined 0.3 percent.
  • The Stoxx Europe 600 eased 0.3 percent, the first decrease in four sessions.
  • The MSCI Emerging Market Index dropped 0.3 percent.
  • The MSCI Asia Pacific Index fell 0.1 percent.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2 percent, the first increase in four days.
  • The euro fell 0.2 percent to $1.1369, while the yen weakened 0.4 percent to 111.03 per dollar.
  • The British pound strengthened 0.4 percent to $1.3305, the third consecutive increase.
  • The MSCI Emerging Markets Currency Index rose 0.1 percent.

Bonds

  • The yield on 10-year Treasuries rose five basis points to 2.68 percent.
  • Germany’s 10-year yield climbed three basis points to 0.15 percent.
  • Britain’s 10-year yield rose seven basis points to 1.27 percent, the third straight daily increase.

Commodities

  • West Texas Intermediate rose 2.7 percent to $56.97 a barrel.
  • Gold fell 0.7 percent to $1,320 an ounce.
  • The Bloomberg Commodity Index rose 0.5 percent, the first increase in three days.

©2019 Bloomberg L.P.