U.S. stocks resume sell-off with tech battered anew
A fresh sell-off in megacap technology shares sent stocks to the fourth loss in five days as investors remain worried that valuations stretched too far in a five-month rally. Treasurys rose with the dollar.
The S&P 500 dropped as much as 2%. Volatility has been even more prevalent in the Nasdaq 100, where close-to-close runs have been at least 1% for seven sessions. Energy companies, a small cohort in major averages, plunged as crude dropped back toward $37 a barrel in New York.
Treasurys reversed losses as the equity decline picked up speed. Gold advanced, while copper tumbled. The dollar strengthened versus major peers.
Volatility continued to grip American financial markets after a rally that added $7 trillion to U.S. equity values over five months. Reasons for caution were plenty, though no single factor alone set the tone. Signs mounted that the pandemic continues to upend the global economy. In the U.S., data showed cracks in recent labor-market strength, while Europe re-emerged as a virus hot spot. Congress remained far apart on a fresh relief bill.
"We likely have not seen the full correction play out yet," said Matt Forester, chief investment officer at BNY Mellon Lockwood Advisors. "It's difficult to point to a specific catalyst, but currency volatility rose today on concerns about a hard Brexit and we've seen some worse news about the virus in Europe."
In Europe, the pound fell amid renewed Brexit tensions. The euro jumped 0.7% the region's central bank was said to agree that there's no reason to overreact to the currency's strength. BP Plc slipped after making its first venture into offshore wind power with a $1.1 billion purchase of U.S. assets from Norway's Equinor ASA.
After a volatile few days, technology stocks are still front and center with a fragile rally under threat. Monday,, the S&P 500 rose the most since June overnight and the Nasdaq rebounded following an 11% rout that took the gauge down to its 50-day moving average, a closely-watched technical level.
"It is too early to declare that the growth rally has ended, but this week should be a reminder for investors that while the exuberance remains, the storm is never far away," Geir Lode, head of international global equities at Federated Hermes, wrote in a note to clients.
These are the main moves in markets:
Stocks
- The S&P 500 Index fell 1.6% as of 2:45 p.m. EDT.
- The Nasdaq 100 lost 2.1%.
- The Stoxx Europe 600 Index declined 0.6%.
- The MSCI Asia Pacific Index advanced 0.7%.
- The MSCI Emerging Market Index increased 0.4%.
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%.
- The euro gained 0.2% to $1.183.
- The British pound fell 1.6% to $1.277.
- The Japanese yen was flat at 106.15 per dollar.
- The offshore yuan was little changed at 6.8315 per dollar.
Bonds
- The yield on 10-year Treasurys fell two basis points to 0.68%.
- The yield on two-year Treasurys fell two basis points to 0.1389%.
- Germany's 10-year yield jumped two basis points to -0.44%.
- Britain's 10-year yield gained one basis point to 0.247%.
- Japan's 10-year yield dipped less than one basis point to 0.028%.
Commodities
- West Texas Intermediate crude declined 0.6% to $37.53 a barrel.
- Brent crude decreased 0.6% to $40.38 a barrel.
- Gold strengthened 0.6% to $1,957.35 an ounce.
