BS: Oil Tumble on Home-Sales Plunge; Treasuries, Yen Rally
Aug. 24 (Bloomberg) -- Stocks tumbled, the 10-year Treasury yield fell to the lowest in 17 months and the yen surged to the highest versus the dollar since 1995 as a bigger-than-estimated plunge in home sales stoked concern the economy may relapse into a recession. Oil fell below $72 a barrel.
The Standard & Poor’s 500 Index sank 1.4 percent to 1,052.93 at 10:29 a.m. in New York while the Stoxx Europe 600 Index declined 2.1 percent. Japan’s Nikkei 225 Stock Average entered a bear market and the MSCI World Index of stocks in 24 developed nations fell 1.6 percent. The yen gained as much as 1.6 percent to 83.60 per dollar. U.S. 10-year yields fell 12 basis points to 2.48 percent, the lowest since March 2009, and the two-year yield slipped to a record low.
“This is yet one more piece of disappointing economic news,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. “Irrespective of whether there’s a double dip, jobs aren’t being created. Without jobs they’re not going to get better numbers on housing.”
CRH, Vedanta, Cairn
Construction and materials companies led declines by all 19 industries on Europe’s Stoxx 600, while more than 13 shares dropped for every one that gained. CRH slumped as much as 17 percent, the biggest intraday drop since at least 1988. Vedanta Resources Plc tumbled 6.8 percent to a 10-month low. Cairn Energy Plc sank 3.2 percent after its first well off Greenland found natural gas rather than crude oil. WPP Plc, the world’s largest advertising company, lost 3.4 percent after profit missed estimates.
Rio Tinto Group slipped 3.8 percent after the Globe and Mail reported that the world’s third-largest mining company may be considering a bid for Potash Corp. of Saskatchewan Inc. together with a Chinese partner to rival a $40 billion proposal by BHP Billiton Ltd. Dell Inc. fell 4.3 percent as a person close to the matter said the company may raise its bid for 3Par Inc. after Hewlett-Packard Co. offered to buy the maker of data- center equipment for about $1.6 billion, 33 percent higher than Dell’s offer.
Bear Markets
The MSCI Asia Pacific Index sank 0.6 percent as Japan’s Nikkei 225 fell to its lowest close since May 1, 2009. The gauge has retreated 21 percent since reaching an 18-month high on April 5, a drop that signifies a bear market to some analysts. Vietnam’s VN Index tumbled 3 percent, taking its retreat since May 6 to 21 percent.
Treasuries and German government bonds rose, with the yield on 10- and 30-year bunds falling to record lows. German 10-year yields fell 11 basis points to 2.17 percent, while 30-year yields also dropped 13 basis points, to 2.78 percent.
Europe is at risk of going into a so-called “double-dip” recession, as governments cut spending to narrow their fiscal deficits, Nobel Prize-winning economist Joseph Stiglitz said in an interview with Dublin-based RTE Radio today.
The cost of insuring against losses on European corporate bonds rose, with the Markit iTraxx Crossover Index of credit- default swaps climbing 8.3 basis points to a one-week high of 509.1.
--With assistance from Matthew Brown, Claudia Carpenter, David Merritt, Abigail Moses, Michael Patterson and Steve Voss in London. Editors: Stephanie Borise, Stephen Kirkland.
