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US stock slide deepens, treasuries gain ahead of Fed

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  • At 8:13 am ET, Dow e-minis were up 0.12%. S&P 500 e-minis were up 0.07% and Nasdaq 100 e-minis were up 0.10%
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 New York: US equities declined on Wednesday as cautious investors awaited the Federal Reserve policy decision and further news on US-China trade talks. Ten-year Treasury yields slipped.

The S&P 500 Index moved to session lows, weighed down by the financial and health-care sectors. Energy shares bucked the trend, outpacing the benchmark after an unexpected drop in US crude inventories pushed oil prices over $60 a barrel. Two-year Treasury yields remained below the top of the Fed’s policy target range amid expectations of a dovish tone from the central bank. Apart from a hold on rate increases, markets will watch for any word on plans to end the Fed’s current bond-portfolio run-down.

“The focus is going to be entirely on their dot plot and whether or not the Fed has taken any chance of a rate hike out of their own internal forecast," said Lara Rhame, chief US economist at FS Investments, which manages $24 billion. “It’s going to be interesting to see if any of the Fed has priced in a rate cut, which I doubt they have, and then how many are thinking they may still need to adjust rates higher once or twice more throughout the year -- because I think it’s been a little premature for the market to discount any rate hike."

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(Bloomberg)

In Europe, a raft of negative corporate news dragged down the Stoxx Europe 600 Index. Germany’s DAX Index led the retreat as BMW AG warned earnings would fall and chemical maker Bayer AG headed for the biggest drop in 15 years after losing the first phase of a US trial over claims its weed killer caused cancer. In Asia, Japanese shares finished higher, while most other markets dipped.

The pound fell as UK Prime Minister Theresa May sought to extend the Brexit deadline, while the opposition called for the public to have the final say over the country’s EU exit. The euro held steady after German producer prices missed estimates. European sovereign bonds were mixed.

And these are the main moves in markets:

Stocks

The S&P 500 Index decreased 0.6% as of 12:01 pm New York time. The Stoxx Europe 600 Index declined 0.8%. The UK’s FTSE 100 Index fell 0.2%. The DAX Index sank 1.4%, its biggest tumble in almost six weeks. The MSCI Emerging Market Index fell 0.3%.

Currencies

The Bloomberg Dollar Spot Index gained less than 0.05%. The euro advanced less than 0.05% to $1.1353, the strongest in almost three weeks. The British pound sank 0.6% to $1.3187. The Japanese yen fell less than 0.05% to 111.43 per dollar.

Bonds

The yield on 10-year Treasuries decreased three basis points to 2.59%. Germany’s 10-year yield declined two basis points to 0.08%. Britain’s 10-year yield dipped four basis points to 1.144%.

Commodities

West Texas Intermediate crude gained 1.7% to $60.02 a barrel, a four-month high. Gold fell 0.5% to $1,299.95 an ounce.


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