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Stocks Fall to Two-Month Low as Treasuries Rally: Markets Wrap

Stocks Steady, Treasury Yields Touch 19-Month Low: Markets Wrap

Stocks Fall to Two-Month Low as Treasuries Rally: Markets Wrap
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

(Bloomberg) --

U.S. stocks fell to the lowest since March as a rally in 10-year Treasuries rekindled concern that a key recession signal has started to flash warnings amid what could be a protracted trade dispute with China.

The S&P 500 slumped back toward 2,800, with 10 of 11 main groups lower on the day. Selling accelerated in the afternoon session as the retreat in the the 10-year yield pushed it more than 9 basis points below the rate on the three-month bill, further inverting a part of the yield curve watched for its ability to signal a recession. Bonds were in demand after President Donald Trump declared that the U.S. was “not ready” to reach a trade deal with China.

Stocks Fall to Two-Month Low as Treasuries Rally: Markets Wrap

Stalled talks in the U.S.-China trade war and escalating tensions have soured sentiment for risk assets. That’s driven sovereign bonds higher and pushed global stocks toward their first monthly decline of 2019. With the Federal Reserve reiterating last week that it remains fully in patience mode, investors have little reason to bid stocks higher.

“Markets are coming to grips with the fact that that’s going to be a story where they won’t get a resolution anytime soon,” Shawn Cruz, manager of trader strategy at TD Ameritrade, said in a phone interview.

Here are some key events coming up:

  • China provides a first peek at its May economic performance on Friday, with economists anticipating the official manufacturing PMI will tick down to 49.9 — a contraction — amid the worsening trade war with the U.S.
  • U.S. first-quarter revised GDP data are due Thursday.

And these are the main moves in markets:

Stocks

  • The S&P 500 dropped 0.8% as of 4 p.m. in New York.
  • The Nasdaq 100 Index declined 0.3%.
  • The Stoxx Europe 600 Index lost 0.2%.
  • The MSCI Emerging Market Index fell 0.2%.
  • The MSCI Asia Pacific Index climbed 0.3%.

Currencies

  • The Bloomberg Dollar Spot Index rose 0.3%, the biggest advance in a week.
  • The euro fell 0.3% to at $1.1164.
  • The Japanese yen rose 0.1% to 109.361 per dollar.

Bonds

  • The yield on 10-year Treasuries decreased six basis points to 2.26%, the lowest since September 2017.
  • Germany’s 10-year yield fell to -0.16%, the lowest in more than two years.

Commodities

  • Gold futures declined 0.4% to $1,284.10 an ounce.
  • West Texas Intermediate crude gained 0.4% to $58.88 a barrel.

--With assistance from Andreea Papuc, Ksenia Galouchko and Namitha Jagadeesh.

To contact the reporter on this story: Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, ;Samuel Potter at spotter33@bloomberg.net, Todd White

©2019 Bloomberg L.P.