US Stocks Extend Slump, Treasury Gains Unravel: Markets Wrap

(Bloomberg) — US stocks fell while Treasuries unwound the previous day’s gains following stronger-than-expected jobs numbers. 

The S&P 500 slipped 0.4%. Yields on 10-year Treasuries rose to 3.81% after hitting a low of 3.69% on Tuesday as investors sought haven assets. The dollar rose to a session high after the labor readout.

Data Wednesday showed US companies added more jobs than expected last month, at odds with other indicators that show a cooling labor market. Further out this week, investors will be watching for nonfarm payrolls numbers to check the health of the US economy.

“Today’s ADP employment number surprised to the upside, suggesting the labor market is bending but not breaking,” said Chris Larkin at E*Trade from Morgan Stanley. “Friday’s monthly jobs report will have the final word on the current jobs picture, and more than likely, on near-term market sentiment.”

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Flaring tensions in the Middle East have left markets awaiting Israel’s response to a missile barrage from Iran, and WTI crude testing $72 a barrel, geopolitical fears have over taken optimism around central bank easing as the main market driver. 

The escalation in the region spurred a flight to safety on Tuesday and sent Wall Street’s fear gauge — the VIX — to a key level that usually indicates more market swings are in store. 

“Clearly there is a lot of uncertainty,” Anna Rosenberg, head of geopolitics at Amundi Asset Management, told Bloomberg TV. “Nevertheless I think the market is still very much operating in the base-case expectation that it remains more or less contained and doesn’t spiral out in an all-out war. And I think right now, that is the right thing to do.”

In company news, shares of Humana Inc. plunged after a drop in the health insurer’s Medicare quality ratings while Nike Inc.’s stock slid following disappointing quarterly sales.

The change in focus from inflation to the health of the economy, “can shift right back, especially if you look at how energy is responding to the latest Middle East flareup,” Wei Li, chief investment strategist at BlackRock Inc., told Bloomberg Television. 

Meanwhile, the Japanese yen fell more than 1% against the dollar following comments from Prime Minister Shigeru Ishiba, who said conditions weren’t right for the Bank of Japan to move again following two interest rate hikes earlier this year. 

Chinese stocks listed in Hong Kong jumped the most in almost two years after Beijing followed other major cities in relaxing home purchase rules. The massive stimulus efforts announced by China’s leaders last week turbocharged local assets and helped lift markets overseas.

Key events this week: 

• S&P Global Manufacturing PMI on Wednesday
• Fed speakers include Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman on Wednesday
• US nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.2% as of 9:30 a.m. New York time
• The Nasdaq 100 fell 1.4%
• The Dow Jones Industrial Average was little changed
• The Stoxx Europe 600 fell 0.1%
• The MSCI World Index fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.1% to $1.1054
• The British pound was little changed at $1.3273
• The Japanese yen fell 1.3% to 145.45 per dollar

Cryptocurrencies

• Bitcoin rose 0.1% to $60,876.73
• Ether fell 1.1% to $2,424.94

Bonds

• The yield on 10-year Treasuries advanced seven basis points to 3.80%
• Germany’s 10-year yield advanced seven basis points to 2.11%
• Britain’s 10-year yield advanced 10 basis points to 4.04%

Commodities

• West Texas Intermediate crude rose 3.3% to $72.16 a barrel
• Spot gold fell 0.2% to $2,657.57 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Rob Verdonck, Winnie Hsu and Margaryta Kirakosian.

©2024 Bloomberg L.P.