BLBG: Stocks Tumble With Oil While Treasuries, Dollar Advance
Global stocks sank with crude while Treasuries and the dollar climbed as concern deepened that global growth is slowing. Bonds from Greece to Spain tumbled.
The Standard & Poor’s 500 Index (SPX) tumbled 1.2 percent at 9:33 a.m. in New York, wiping out its gains for the year. Stoxx Europe 600 Index (BCOM) fell 1.7 percent, sliding an eighth day in the longest rout since 2003. The 10-year Treasury yield dropped 7 basis points to 2.07 percent. West Texas Intermediate crude slid to as low as $79.78. The yield on 10-year Greek bonds jumped 106 basis points and Spain’s yield increased 14 basis points. The dollar gained 0.7 percent to $1.2755 per euro.
About $672 billion was wiped from global shares yesterday and average bond yields around the world fell to records after reports showed a bigger-than-projected drop in U.S. retail sales. Stocks stayed lower after Labor Department data showed jobless claims unexpectedly dropped last week to their lowest level in 14 years, while industrial production rose in September by the most in almost two years.
“There is a combination of concerns over the outlook for global growth and concerns on the outlook for inflation in the wake of a slew of negative data,” Jeremy Batstone-Carr, head of research at Charles Stanley & Co. in London, said in a phone interview. “There is the likelihood that third-quarter corporate earnings expectations which have already been lowered may very well be lowered again.”
The S&P 500 plunged more than 3 percent yesterday, the biggest intraday drop in three years, before losses were pared in the final two hours. Federal Reserve Chair Janet Yellen helped ease the selloff after voicing confidence in the durability of the U.S. economic expansion. She spoke at a closed-door meeting last weekend, people familiar with her comments told Bloomberg News yesterday.
Fed Stimulus
The benchmark gauge has fallen 8.4 percent from its Sept. 18 record amid concern a global slowdown will hurt the American economy just as the Fed weighs when to raise interest rates. The central bank has been gradually winding down its $85 billion plan of monthly bond purchases since January and is poised to stop the final $15 billion at the end of the month.
Concern about the spread of Ebola has also started to affect investor psychology, and investors are watching corporate earnings for clues to the economy’s strength. Profit for S&P 500 members probably rose 4.8 percent in the third quarter and sales increased 4.2 percent, analysts projected.
Netflix, Goldman
Netflix Inc. slumped 24 percent after reporting third-quarter subscriber growth that missed the company’s forecast. EBay Inc., which will spin off the PayPal payments business, fell 3.4 percent after giving a sales projection for the fourth quarter that missed estimates.
Goldman Sachs slid 2.5 percent. The company reported third-quarter earnings that surpassed analysts’ estimates as it set aside a smaller portion of revenue to pay employees than in the first half of the year. The firm raised its quarterly dividend by 5 cents.
More than eight shares declined for every one that gained in the Stoxx 600, with trading volumes 139 percent above the 30-day average, according to data compiled by Bloomberg. The gauge slumped 8.8 percent in eight days.
Nestle SA lost 3.3 percent after the world’s biggest food company reported nine-month sales that missed analysts’ estimates. Shire Plc, which plunged the most in 12 years yesterday, tumbled 10 percent today, after AbbVie Inc.’s board formally asked shareholders to vote against a takeover of the U.K. drugmaker.
Man Group Plc (EMG) rose 4.1 percent after the world’s largest publicly traded hedge-fund manager said assets under management jumped 25 percent in the third quarter.
Surging Volatility
The selloff in stocks triggered a surge in volatility. A Bank of America Corp. index that tracks swings in equities, Treasuries, currencies and commodities rose to the highest level in 13 months yesterday and the Chicago Board Options Exchange Volatility Index jumped 15 percent to a more than two-year high. Europe’s VStoxx Index advanced 15 percent, headed for its biggest two-day jump since May 2010, to 33.03 today.
The MSCI Emerging Markets Index slid 1.6 percent to a six-month low as benchmark gauges in India, Thailand, the United Arab Emirates and the Czech Republic dropped at least 1.3 percent.
Shares in Dubai capped the biggest weekly decline since December 2008. The Dubai Financial Market General Index lost 5 percent, sliding 14 percent this week. Abu Dhabi’s benchmark gauge lost 2.3 percent, leaving it 6.1 percent lower in the period.
Ruble Weakens
The ruble erased its first advance in nine days as more than $9 billion in interventions failed to stem the Russian currency’s rout amid a slump in oil prices. The ruble weakened 1.3 percent to 46.1202 against the dollar-euro basket, headed for a record close. It strengthened 0.6 percent yesterday after the government announced a plan to start auctioning foreign currency to address a domestic dollar and euro shortage. The Micex Index of stocks slipped 1.2 percent after falling 1.2 percent yesterday.
The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong fell 1 percent to the lowest close since June 25. The Shanghai Composite Index dropped 0.7 percent. In Hong Kong, video footage showing police allegedly beating a protester triggered an outcry from hundreds of people at pro-democracy demonstrations.
Oil, Bonds
WTI fell 1.4 percent to $80.61 after declining as much as 2.5 percent. Brent slumped 0.9 percent to $83.04 a barrel, reaching the lowest since Nov. 23, 2010. The Bloomberg Commodity Index dropped as much as 0.7 percent to the lowest since July 2009. Lead declined 1.3 percent to the lowest since May 2013.
U.S. 10-year Treasuries rose for an eighth day, the longest winning streak in two years. Yields slid to 1.86 percent yesterday, the lowest since May 2013, Bloomberg Bond Trader prices show. The rush for the safest fixed-income assets sent average bond yields around the world to a record low yesterday, according to the Bank of America Merrill Lynch Global Broad Market Index.
Japan’s 10-year yield dropped as low as 0.47 percent today, the least since April 2013.
In Europe, higher-yielding government bonds came under renewed pressure amid a selloff in Greek assets. Greece’s 10-year yield jumped to 8.74 percent. Italy’s 10-year yield climbed 20 basis points to 2.62 percent and Ireland’s increased 22 basis points to 1.92 percent.
Spanish bonds extended declines after the government sold less debt than its maximum target at auction.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Nick Gentle in Hong Kong at ngentle2@bloomberg.net
To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net Jeff Sutherland, Claudia Carpenter
