U.S. stocks extend losing streak as tech rally retreats
U.S. stocks fell for a sixth day, extending the longest losing streak of Donald Trump’s presidency, as an early rally in tech folded and energy shares plunged. The dollar fell with oil and Treasuries rose.
The S&P 500 Index was down 1 per cent and has tumbled 5.5 per cent in the past six days. The tech-heavy Nasdaq 100 reversed an earlier gain to trade lower following a 4.4 per cent decline on Wednesday. Trading was heavy with volume surging 55 per cent above the average for this time over the past 30 days.
“We’re in a change in the markets because of the huge interest rate move, so the market is trying to figure out what to do next,” said Joe “JJ” Kinahan, chief market strategist at TD Ameritrade. “This is about a shifting of the sands and what’s next.”
In addition to energy, biotech, insurance and retailers weighed on the market, while car companies were one of few bright spots. The Cboe Volatility Index rose to the highest level since April.
“Volatility is back and it may require more active strategies on the part of investors to pursue their long-term goals. Volatility is also not to be feared, but embraced, as varying data points will cause bouts of market anxiety. But remember that fundamentals are still strong,” explained Chief Investment Strategist John Lynch.
Investors seeking to pinpoint the cause of the current rout in equities have no shortage of culprits: U.S companies are increasingly fretting the impact of the burgeoning trade war, while the same issue prompted the IMF to dial down global growth expectations. In the tech sector, which was a key driver of the rally that pushed American equities to a record just a month ago, expensive-looking companies have been roiled by a hacking scandal.
Against this backdrop, the Federal Reserve has been trimming its balance sheet and raising interest rates, provoking the ire of an unpredictable American president and helping force a repricing of riskier assets.
“What you’re seeing right now is a bit of a panic — we wouldn’t say this looks like the end of the cycle,” said William Hobbs, head of investment strategy at Barclays Investment Solutions in London. “You’ve got to try to keep the skin in the game for as long as possible because it’s an incredibly profitable period of the cycle to be invested through if you can keep your nerve.”
Elsewhere, West Texas Intermediate crude slumped back below US$72 a barrel amid a broad decline in commodities as OPEC cut estimates for demand. Precious metals bucked the trend, and gold jumped. A Bloomberg index of cryptocurrencies dropped as much as 11 per cent.
These are the main moves in markets:
Stocks
Canada’s main stock index posted a triple-digit decline. The S&P/TSX Composite Index was down 104.05 points to 15,413.35 as of 11:22 a.m. ET.
The S&P 500 Index was down 1 per cent as of 11:07 a.m. in New York. The Dow Jones Industrial Average declined 1 per cent, while the Nasdaq indexes also slumped. The Stoxx Europe 600 Index sank 1.9 per cent to the lowest in 20 months. The MSCI Asia Pacific Index plunged 3.4 per cent, hitting the lowest in almost 17 months with its ninth consecutive decline and the largest tumble in eight months. The MSCI Emerging Market Index dropped 3.1 per cent, reaching the lowest in about 18 months on its sixth straight decline and the biggest tumble in more than two years.
Currencies
The Bloomberg Dollar Spot Index fell 0.3 per cent to the lowest in more than a week on the largest dip in three weeks. The euro increased 0.6 per cent to US$1.1589, the strongest in almost two weeks on the biggest increase in three weeks. The British pound climbed 0.3 per cent to US$1.324, the strongest in three weeks. The Japanese yen advanced less than 0.05 per cent to 112.23 per dollar, reaching the strongest in more than three weeks on its sixth straight advance.
Bonds
The yield on 10-year Treasuries was little changed at points to 3.16 per cent. Germany’s 10-year yield decreased two basis points to 0.53 per cent, the lowest in more than a week. Britain’s 10-year yield dipped three basis points to 1.697 per cent.
Commodities
West Texas Intermediate crude decreased 2.1 per cent to US$71.65 a barrel. Gold increased 1.8 per cent to US$1,215.70 an ounce, the highest in three weeks.
Source: BNN Bloomberg
https://www.bnnbloomberg.ca/u-s-stocks-extend-losing-streak-as-tech-rally-retreats-1.1150777
