S&P 500 enters correction, then pares losses

by

Sarah Ponczek and Vildana Hajric

New York | A rout in technology shares deepened, threatening to push the S&P 500 Index into corrective territory along with the Nasdaq Composite Index, in one of the most volatile weeks this year. Treasuries and gold rose as investors sought refuge.

ASX were 17 points or 0.3 per cent lower at 5644 at 6.10am AEDT Saturday. The Australian dollar edged 0.2 per cent higher.

The S&P 500 finished just short of a 10 per cent decline from its record September high, and remains on pace for the worst month since 2009. The tech-heavy Nasdaq indexes bore the brunt of selling after Amazom and Alphabet sank on disappointing results. The Chicago Board Options Exchange Volatility Index shows price swings are the greatest since February. Investors got a brief reprise after a report showed the US economy expanded at a high-than-forecast 3.5 per cent pace last quarter.

“It’s a very treacherous environment because you see these big up days and then they get their heads handed to them,” said Donald Selkin, chief market strategist at Newbridge Securities. “There’s no consistency. It’s vicious, it’s nerve wracking. There’s no consistency.”

The rout that had largely been contained to equities spilled into other assets. Gold spiked toward the highest since July and the rally in Treasuries pushed the two-year note yield down 10 basis points this week. Yields on benchmark 10-year notes have slumped 11 basis points, the biggest weekly decline since May.

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In Europe, the Stoxx Europe 600 Index continued its retreat, heading for the biggest monthly drop in three years. Asian shares sank deeper into a bear market earlier. Core European bonds gained as the risk-off mood spread.

Markets remain on edge after more than $US6.7 trillion was lost from global equities’ value since late September, as lofty expectations for earnings were tested amid heightened trade tensions and tightening financial conditions.

Meanwhile, West Texas oil briefly dipped back below $US67 a barrel and copper closed the week lower. The offshore yuan extended this week’s slide to trade at the weakest since January 2017, while the yen pushed higher. Emerging-market stocks tumbled to the lowest in 19 months, capping a fifth straight week of losses.

These are the main moves in markets:

Stocks

The S&P 500 dropped 1.7 per cent to 2658.57 as of 4.04pm in New York, while the Dow Jones Industrial Average fell 1.2 per cent to 24,688.31 and the Nasdaq Composite Index declined 2.1 per cent to 7167.21.
The Stoxx Europe 600 dropped 0.8 per cent.
The UK’s FTSE 100 slumped 0.9 per cent.
Germany’s DAX Index fell 0.9 per cent.
The MSCI Emerging Market Index eased 0.9 per cent.
The MSCI Asia Pacific Index slumped 0.3 per cent.

Currencies

The Bloomberg Dollar Spot Index fell 0.3 per cent, after reaching a 17-month high.
The euro gained 0.3 per cent to $US1.1411.
The British pound rose 0.2 per cent to $US1.2836.
The Japanese yen strengthened 0.6 per cent to 111.77 per dollar.

Bonds

The yield on 10-year Treasuries fell four basis points to 3.08 per cent, while the two-year note yield eased four basis points to 2.81 per cent.
Germany’s 10-year yield fell five basis points to 0.35 per cent.

Commodities

West Texas Intermediate crude rose 0.7 per cent to $US67.80 a barrel.
Gold rose. 0.2 per cent at $US1234.70 an ounce.

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