Global stocks tumbled the most since November and commodities fell as a report signaled the euro- area’s economy contracted more than forecast and concern grew that the U.S. Federal Reserve may slow the pace of stimulus. The euro weakened while German bunds rose with Treasuries.
The MSCI All-Country World Index of equities lost 1.3% at 3:30 p.m. in New York and emerging-market stocks erasing this year’s gains. The Standard & Poor’s Index fell 0.4% after the gauge sank 1.2% yesterday, the most in three months. The S&P GSCI Index of 24 raw materials retreated 1.5% to a one-month low as oil settled at its lowest price of the year. The euro declined 0.8% to $1.3183. U.S. 10-year yields slipped three basis points to 1.98% as Germany’s 10-year rate slipped eight basis points.
A report on the euro-area’s economy signaled the region is struggling to recover from a recession, while U.S. data showed jobless claims rose more than forecast and Philadelphia-area manufacturing unexpectedly shrank. Fed policy makers said the central bank should be ready to vary the pace of its $85 billion in monthly bond purchases, minutes from the group’s last meeting showed yesterday, spurring concern stimulus will be curtailed.
“We have a hangover from the minutes yesterday,” Joe Heider, Cleveland-based principal for Rehmann Financial Group, which oversees $2.2 billion in assets, said in a phone interview. “Today will be in the red. We’ll be negative as a result of this hangover. But I don’t think it’s a long-term trend.”
The S&P 500 dropped from a five-year high yesterday after rising 7.3% since the beginning of the year through Feb. 19. Indexes of commodity, industrial and technology companies lost more than 0.6% to lead declines in eight of the 10 main industry groups in the S&P 500 today. Intel Corp., Caterpillar Inc., Home Depot Inc. and Bank of America Corp. lost more than 2% to lead the Dow Jones Industrial Average lower.
Wal-Mart Stores Inc., the world’s largest retailer, rose 2% as its dividend increase overshadowed a first-quarter profit forecast that trailed analysts’ estimates.
U.S. jobless claims increased by 20,000 to 362,000 in the week ended Feb. 16, the Labor Department reported today. The median forecast of 48 economists surveyed by Bloomberg called for an increase to 355,000. The Federal Reserve Bank of Philadelphia’s general economic index dropped to minus 12.5, trailing the median estimate for a reading of 1.