S&P 500 Slumps on Virus Angst After European Rout: Markets Wrap

(Bloomberg) -- U.S. stocks slumped, joining a global decline as a new variant of the coronavirus in the U.K. and a wave of lockdowns and travel restrictions damped spirits.

The S&P 500 Index dipped about 0.4%, dragged lower by losses for Tesla Inc., which fell more than 6% on its first day after being added to the U.S. benchmark. The Dow Jones Industrial Average eked out a gain as Goldman Sachs Group Inc. rallied after regulators approved a stock buyback. The yield on 10-year Treasuries retreated and the dollar climbed.

The weakness in U.S. markets was minor compared to the rout seen in Europe, where the Stoxx 600 Index slumped the most since October as Italy, the Netherlands, Belgium and France closed their borders to the U.K. Travel and leisure stocks were hard hit.

Bulls did have some reason for optimism, including progress on a $900 billion U.S. economic aid package. Pfizer Inc. and BioNTech SE’s Covid-19 vaccine also won the backing of a key European review panel, and a first wave of inoculations continued in the U.S.

Despite the positive developments, the emergence of the variant coronavirus strain in Britain put a damper on the return-to-work trade that’s lately taken hold. After global equities reached a record last week, traders pulled back to monitor the latest virus news.

“Fiscal stimulus is clearly fading as a catalyst, with Covid trends dictating the direction of markets,” said Emily Roland, the co-chief investment strategist at John Hancock Investment Management. “Risk assets had been shrugging off worsening virus trends, but are now showing some signs of vulnerability.”

The pound pared losses as U.K. Prime Minister Boris Johnson offered a fresh proposal to secure an 11th-hour trade deal with the European Union. Crude oil tumbled.

Here are some key events coming up:

• EIA crude oil inventory report is due Wednesday.
• U.S. jobless claims, durables, personal income data comes Wednesday.
• U.S. bond and stock trading and markets in other parts of the world will shut early on Thursday for the Christmas holidays. Most global markets are shut Friday.

These are the main moves in markets:

Stocks

• The S&P 500 Index retreated 0.4% as of 4 p.m. New York time.
• The Stoxx Europe 600 Index slumped 2.3%.
• The MSCI Asia Pacific Index declined 0.4%.
• The MSCI Emerging Market Index dropped 0.9%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%.
• The euro decreased 0.2% to $1.2235.
• The British pound decreased 0.5% to $1.3454.
• The Japanese yen fell less than 0.1% to 103.34 per dollar.

Bonds

• The yield on 10-year Treasuries decreased one basis point to 0.94%.
• Germany’s 10-year yield decreased one basis point to -0.58%.
• Britain’s 10-year yield decreased four basis points to 0.20%.

Commodities

• West Texas Intermediate crude sank 2.8% to $47.74 a barrel.
• Gold fell 0.2% to $1,877,.11 an ounce.

©2020 Bloomberg L.P.