Stocks Close Mixed as Sovereign Debt Yields Surge: Markets Wrap

All you need to know about global markets this morning.

11 Sep 2019, 03:50 AM IST

Stocks Close Mixed as Sovereign Debt Yields Surge: 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 finished mixed as investors ditched the companies behind the latest risk-on rally, while sovereign bond yields rose in Europe and America.

High-flying health-care shares led declines Monday, as some on Wall Street including Goldman’s Asad Haider sounded the alarm to a “potential onslaught of drug pricing headlines in the coming weeks following Congress’s August recess.” Megacap tech names also retreated. Stocks coveted for their high dividend yields, including real-estate and utility names, retreated as the 10-year rate topped 1.6%.

“The fact that we’ve had a bit of a reversal in the Treasury market has scared some of the momentum players,” said Charlie Smith, founding partner and chief investment officer at Fort Pitt Capital Group in Pittsburgh.

German bunds led the drop in sovereign debt, with yields on longer-dated notes climbing more than shorter-dated securities, as traders pared back expectations that the European Central Bank will unveil a big stimulus package this week. Rates on longer-dated Treasury notes climbed more than those on shorter-dated securities, reversing an inversion in the yield curve.

Treasury Secretary Steven Mnuchin said earlier that the U.S. and China have made “lots of progress” on trade talks.

“Trade sentiment is driving the market movements on the margin up and down,” Aaron Clark, portfolio manager at GW&K Investment Management, said by phone. “The commentary that we’ve heard over the past week or so, clearly markets have taken note of that and already priced some of that in.”

Elsewhere, oil advanced after Saudi Arabia’s new energy minister signaled that OPEC and its allies will continue with production cuts, as the group prepares to gather in Abu Dhabi. A benchmark for emerging-market shares climbed for a fourth straight session, putting it on track for the highest close in five weeks.

Here are some key events coming up this week:

OPEC’s monthly oil market report, which includes demand forecasts and production estimates, is due Wednesday.
The ECB policy meeting Thursday is widely expected to see a cut to interest rates and a review of all options, including QE. Policy makers will also publish forecasts for growth and inflation. ECB President Mario Draghi will hold a press conference.

These are the main moves in markets:

Stocks

The S&P 500 Index was little changed at 2,978.46 as of 4:01 p.m. New York time.

The Dow Jones Industrial Average gained 0.1% to 26,836.46, the highest in almost six weeks.

The Nasdaq Composite Index fell 0.2% to 8,087.44.

Currencies

The Bloomberg Dollar Spot Index dipped 0.1% to 1,208.20, reaching the lowest in more than two weeks on its fifth straight decline.

Bonds

The yield on two-year Treasuries gained four basis points to 1.58%, the highest in more than two weeks.

The yield on 10-year Treasuries rose seven basis points to 1.63%, the highest in almost four weeks.

Germany’s 10-year yield gained five basis points to -0.59%, the highest in a month.

Commodities

Gold depreciated 0.4% to $1,500.07 an ounce, the weakest in more than two weeks.

West Texas Intermediate crude gained 2.7% to $58.02 a barrel, the highest in almost six weeks.

--With assistance from Todd White.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

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