S&P 500 sinks to 3-year low as oil tumbles
U.S. stocks gave up gains, Treasuries rose and the dollar halted its rally as investors assessed unprecedented government measures to shield jobs and economies from the coronavirus pandemic.
Consumer companies led the slump in the S&P 500 as New York and London announced new restrictions meant to slow the disease's spread and President Donald Trump said "non-essential" travel will be suspended across the U.S. border with Mexico. Tech stocks performed best as bottom feeders sought bargains. Gains in Asia and Europe cut the weekly drop for stocks worldwide to just under 10%.
The 10-year Treasury yield headed for its lowest closing level since Monday. The dollar weakened after vaulting more than 8% in the previous eight sessions. The pound, Australian dollar and South Korean won all surged as the Federal Reserve coordinated action with global central banks to beef up dollar liquidity swap line arrangements. WTI oil slumped. Gold rose.
"This is not a market that is going to all of a sudden heal itself," Marvin Loh, senior global macro strategist at State Street Global Markets, said by phone.
Investors are weighing a faster pace of coronavirus infections against flickers of optimism that have followed extraordinary government actions, from plans for stimulus and cash handouts to nationalizing companies. Hedge funds, stock exchanges, banks and even brick-and-mortar businesses in the U.S. are lobbying Washington policymakers not to shut markets.
U.S. stock trading volumes surged to about 60% above the average for the time of day, a phenomenon known as quadruple witching caused by expiring options and futures contracts.
Even with stocks down, the turmoil across assets seems to be easing. Still, the World Health Organization said that the pace of infections is speeding up. Cases doubled to 200,000 in the 12 days through Thursday, but just one day later the tally already was almost halfway to 300,000.
"We are now starting to lean into risk," Chad Morganlander, senior portfolio manager at Washington Crossing Advisors, told Bloomberg TV. "The tail of this is going to be potentially somewhat more extended than what the overall market thinks, so we're not going to get back to business as usual for the next three months, but the policy backdrop across the globe will help soften the blow."
These are the main moves in markets:
Stocks:
- The S&P 500 Index fell 1.4% at 12:19 p.m. New York time; the Nasdaq Composite slid 0.7%.
- The Stoxx Europe 600 Index rose 1.8%.
- The MSCI Asia Pacific Index surged 2.6%.
Currencies:
- The Bloomberg Dollar Spot Index dipped 0.4%.
- The euro advanced 0.1% to $1.0698.
- The British pound climbed 2.2% to $1.1734.
- The Japanese yen slipped 0.5% to 111.3 per dollar.
Bonds:
- The yield on 10-year Treasuries dipped 18 basis points to 0.96%.
- Germany's 10-year yield fell 14 basis points to -0.34%.
- Britain's 10-year yield decreased 17 basis points to 0.54%.
Commodities:
- Gold gained 0.9% to $1,485.04 an ounce.
- West Texas Intermediate crude fell 8.1% to $23.17 a barrel.
