Stock Sell-Off Accelerates as Treasury Yields Rise: Markets Wrap
Reported U.S. probe of China hack roils Asia technology shares
Hiring falls short of estimates, pace of wage gains cools
(Bloomberg) — U.S. stocks headed for the biggest two-day slide since May as the sell-off in technology shares deepened amid growing concern the U.S.-China trade spat will intensify. Treasury yields rose to seven-year highs on speculation the latest jobs report clears the path for raising interest rates.
The Nasdaq 100 Index sank to a six-week low and Intel Corp. led declines in the Dow Jones Industrial Average after Bloomberg’s report that China infiltrated American companies with hardware hacks. Chipmakers in the S&P 500 Index fell almost 2 percent, as the measure careened toward a second weekly decline. It has fallen 1.5 percent in the past two days. Stocks began higher after the employment data added to confidence in the strength of the American economy.
Just a week after U.S. stocks plowed to fresh records, investors continued to sell the bull market’s biggest winners, ditching high-flyers from Amazon.com to Netflix. The tech rout is the latest blow for global stocks in a week that saw 10-year U.S. Treasury yields climb to seven-year highs, reducing demand for riskier assets. Fed Chairman Jerome Powell stoked the rates surge when he said the central bank could eventually boost its benchmark past the neutral level.
“It’s more trade worries than anything else because these companies, they either sell a lot to China or produce a lot in China,” said Matt Maley, equity strategist at Miller Tabak + Co. “And we have the issue of the two naval boats in China, which raises it to more than just an economic issue — there are political tensions there. And then, of course, there’s the hacking issue.”
The 10-year bond yield pushed above 3.21 percent as the unemployment rate fell to a 48-year low, though the number of jobs created fell short of estimates. The dollar turned lower versus major peers. Gold futures rose, crude gained and the pound advanced.
“The jobs report was nothing great — it was ok. Today we’re all over the place,” Donald Selkin, chief market strategist at Newbridge Securities, said. “It will be volatile, it will chop around in both directions. We’ll settle into a lower range until earnings start coming out towards the end of the month.” Treasuries resumed a slide as investors speculated the low unemployment rate and major upward revision to prior months would do little to deter the Fed from raising rates for the fourth time this year. The hiring figures were influenced by the hurricane that hit the Southeast last month, muddling the
“This is a report that’s consistent with being pretty close to full employment and it’s going to reinforce the Fed’s path for raising rates,” Alan Krueger, professor of economics at Princeton University said on Bloomberg TV. Earlier, a rout in technology shares roiled Asian equity markets. PC maker Lenovo Group Ltd. plunged 15 percent in Hong Kong, amid Bloomberg’s report that China infiltrated U.S. companies by hacking hardware. In Europe, miners led the Stoxx 600 lower as industrial-metal prices fell and Danske Bank A/S headed for a four-year low. Germany’s 30-year bond was poised for its biggest one-week yield increase since April. Italian bonds also slipped as GDP forecasts failed to convince investors the country will be able to meet fiscal targets.
The S&P 500 fell 0.7 percent at 12:28 p.m. in New York. It’s down 1.1 percent in the week.
The Nasdaq 100 Index sank 1.5 percent to take its slide in the five days to 3 percent.The Stoxx Europe 600 Index fell 0.9 percent to the lowest in three weeks.
The MSCI All-Country World Index declined 0.2 percent to the lowest in more than three weeks.
The MSCI Emerging Market Index dipped 0.7 percent to the lowest in 15 months.
The Bloomberg Dollar Spot Index fell 0.3 percent.
The euro declined less than 0.2 percent to $1.1536.
The British pound climbed 0.6 percent to $1.3099.
The Japanese yen increased 0.1 percent to 113.804 per dollar.
The yield on 10-year Treasuries advanced three basis points to 3.2157 percent, the highest in more than seven years.
The two-year yield rose three basis points to 2.89 percent.
Germany’s 10-year yield climbed three basis points to 0.56 percent, the highest in more than 19 weeks.
Italy’s 10-year yield jumped eight basis points to 3.401 percent.
West Texas Intermediate crude gained 0.1 percent to $74.42 a barrel.
Gold futures increased 0.4 percent to $1,206.80 an ounce.
Copper fell 0.3 percent to $2.78 a pound, the lowest in more than two weeks.
–With assistance from Cormac Mullen, Sarah Ponczek, Jeremy Herron, Adam Haigh, Justina Lee and Robert Brand.
-R.W.NII, yours in 322.
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