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 (CME:ESZ14) tumbled 1.2% at 9:33 a.m. in New York, wiping out its gains for the year. Stoxx Europe 600 Index fell 1.7%, sliding an eighth day in the longest rout since 2003. The 10-year Treasury yield (CBOT:ZCZ14) dropped 7 basis points to 2.07%. West Texas Intermediate crude (NYMEX:CLZ14) 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 (NYBOT:DXZ14) gained 0.7% 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% 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.
The benchmark gauge has fallen 8.4% 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% in the third quarter and sales increased 4.2%, analysts projected.
Netflix Inc. slumped 24% 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% after giving a sales projection for the fourth quarter that missed estimates.
Goldman Sachs slid 2.5%. 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% above the 30- day average, according to data compiled by Bloomberg. The gauge slumped 8.8% in eight days.
Nestle SA lost 3.3% 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% today, after AbbVie Inc.’s board formally asked shareholders to vote against a takeover of the U.K. drugmaker.
Man Group Plc rose 4.1% after the world’s largest publicly traded hedge-fund manager said assets under management jumped 25% in the third quarter.
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