Stocks Decline as Investors Assess Trade Tensions: Markets Wrap

(Bloomberg) -- Stocks fell as investors assessed whether the U.S. and China will be able to ease trade tensions. Apple’s poor forecast hit tech-heavy indexes, while Treasuries declined after U.S. hiring rebounded more than forecast in October.

The S&P 500 dropped for the first time in four days, though the benchmark still had its best week in six months. The index pared about half of Friday’s loss that reached as much as 1.5 percent after President Donald Trump said he thinks the U.S. will reach a trade deal with China. Those comments countered earlier remarks by his adviser Larry Kudlow that had deepened the slide. The Nasdaq 100 paced declines as Apple retreated after underwhelming sales forecasts, while small caps edged higher.

The 10-year Treasury yield rose the most in a month to 3.21 percent and the dollar gained as investors speculated the Federal Reserve won’t be deterred from its rate-hike path after a jobs report showed annual wage gains passed 3 percent for the first time since 2009. West Texas crude fell below $63 a barrel.

“Trade negotiations will continue to be front and center,” Chad Morganlander, senior portfolio manager at Washington Crossing Advisors, said in an interview. “At the same time, the jobs numbers were quite robust. This will push the Fed to continue raising rates.”

Doubts remain on the capacity of earnings to deliver. Apple’s disappointing forecast for the key holiday period suggested weaker-than-expected demand for the company’s pricier new iPhones. Next up is mid-term elections next week. Analysts also doubted the Trump administration’s ability to end the trade tensions any time soon.

Talks between the U.S. and China may not be straightforward, with intellectual property theft still a stumbling block. A Chinese state-owned company was charged Thursday with conspiring to steal trade secrets from American chipmaker Micron Technology Inc. as the Justice Department steps up actions against the Asian nation in cases of suspected economic espionage.

Elsewhere, emerging-market shares jumped the most since March 2016. The euro fell on reports that the ECB was considering new dovish measures. WTI declined as fears over a supply disruption eased after the U.S. was said to agree on giving waivers to eight nations to continue importing Iranian crude.

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Here are the main moves in markets:

Stocks

• The S&P 500 fell 0.6 percent at 4 p.m. in New York, rising 2.4 percent for the week, the best since May.
• The Nasdaq 100 dropped 1.5 percent, but still saw the best week since August.
• The Stoxx Europe 600 Index advanced 0.3 percent.
• The MSCI Emerging Market Index jumped 2.7 percent, the biggest advance since March 2016.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1 percent, gaining for the week.
• The euro fell 0.1 percent to $1.1394.
• The British pound dropped 0.5 percent to $1.2953.
• The Japanese yen dipped 0.5 percent to 113.25 per dollar.

Bonds

• The yield on 10-year Treasuries advanced eight basis points, the most in a month, to 3.21 percent.
• Germany’s 10-year yield advanced four basis points to 0.44 percent.
• Britain’s 10-year yield increased five basis points to 1.500 percent.
• Japan’s 10-year yield climbed one basis point to 0.129 percent.

Commodities

• West Texas Intermediate crude slid 1.3 percent to $62.85 a barrel.
• Gold fell 0.3 percent at $1,234.70 an ounce.
• Copper increased 3.4 percent to $2.81 a pound, biggest rise since September.

--With assistance from Liz Capo McCormick.

To contact the reporters on this story: Jeremy Herron in New York at jherron8@bloomberg.net;Sarah Ponczek in New York at sponczek2@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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