Stocks Drop From Record High; Draghi Whipsaws Euro: Markets Wrap

(Bloomberg) -- U.S. stocks fell from record highs amid a torrent of corporate results, while the euro swung between gains and losses and European bond yields climbed from all-time lows after Mario Draghi didn’t give markets more of a dovish signal.

All 11 industry sectors in the S&P 500 closed lower a day after the benchmark index closed at an all-time high. The Dow Jones Industrial Average slumped to the lowest two weeks as investors digested a flood of earnings. 3M initially advanced after beating estimates before turning lower, while Tesla plunged on weak results. A Federal Trade Commission probe weighed on Facebook, overshadowing impressive results. After the close of regular trading, Amazon fell after posting lower-than-forecast earnings and Alphabet rallied after exceeding revenue estimates.

“Stocks’ weakness, despite today’s ECB dovishness, calls into question how much upside equities have left even if the Fed cuts rates as expected next week,” said Alec Young, managing director of global markets research at FTSE Russell in New York. “With global leading economic indicators still weak, investors seem increasingly unwilling to keep buying without greater signs of improving fundamentals.”

The euro initially plunged versus the dollar after ECB President Draghi left rates unchanged but said a “significant degree” of monetary stimulus is needed and the outlook is “getting worse and worse.” It then spiked before trading little changed.

“For the markets, it continues to be this tug-of-war between continued policy stimulus and whether that’s going to be enough to head off the slowing trend in global growth,” said Ed Campbell, portfolio manager and managing director at QMA.

Earnings have been broadly positive for stocks, but worries still linger over trade and a slowing global economy. Oil was little changed as declining U.S. crude stockpiles and threats to Persian Gulf exports mingled with concerns that slower economic growth will stifle demand.

Most major indexes in Asia advanced, though Korean stocks declined for a second day.

Turkey’s lira fluctuated after the central bank cut its key rate by the most on record. Australia’s dollar hit its low of the session and benchmark bond yields touched a record low after Reserve Bank Governor Philip Lowe said he was prepared to cut interest rates again if needed.

Here are some key events coming up:

• Earnings season rolls on with companies including McDonald’s still to report this week.
• U.S. gross domestic product figures due Friday may show business investment posted the first decline in three years.

These are the main moves in markets:

Stocks

• The S&P 500 Index decreased 0.5% to 3,003.70 as of 4:03 p.m. New York time.
• The Dow Jones Industrial Average sank 0.5% to 27,141.05, the lowest in two weeks on the biggest dip in a month.
• The Nasdaq Composite Index decreased 1% to 8,238.54, the largest decrease in a month.
• The Stoxx Europe 600 Index decreased 0.6% to 389.52, the first retreat in a week and the biggest dip in almost three weeks.
• The U.K.’s FTSE 100 Index dipped 0.2% to 7,489.05, the lowest in almost four weeks.
• Japan’s Nikkei 225 Stock Average gained 0.2% to 21,756.55, the highest in more than 11 weeks.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2% to 1,200.75, the highest in more than five weeks.
• The euro was little changed at $1.1144, the first advance in a week.
• The Japanese yen decreased 0.5% to 108.71 per dollar, the weakest in more than two weeks on the largest dip in almost three weeks.
• The British pound decreased 0.3% to $1.2451.
• The Swiss franc dipped 0.6% to $0.991, the weakest in more than two weeks on the largest dip in almost three weeks.
• The onshore yuan was little changed at 6.872 per dollar.

Bonds

• The yield on 10-year Treasuries gained three basis points to 2.07%.
• The yield on two-year Treasuries climbed three basis points to 1.85%, the highest in two weeks.
• Germany’s 10-year yield rose two basis points to -0.36%, the first advance in more than a week and the largest rise in two weeks.
• Britain’s 10-year yield gained three basis points to 0.71%, the first advance in a week and the biggest rise in two weeks.

Commodities

• Gold declined 0.8% to $1,414.24 an ounce, the weakest in more than a week.
• West Texas Intermediate crude was little changed at $55.89 a barrel.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Olivia Rinaldi in New York at orinaldi1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

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