U.S. Stocks Drop to Three-Week Low on Growth Woes: Markets Wrap

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U.S. equities fell to a three-week low on concern about the outlook for growth after fresh data pointed to a slowing economy before a key jobs report Friday. The dollar rose for a sixth day and oil fell.

Energy and health-care companies led losses on the S&P 500 Index, sending the gauge toward its worst week of the year after reports showed the U.S. trade deficit widened in 2018 to a 10-year high and private companies added fewer employees than analysts forecast last month. General Electric Co. slumped a second day after the new CEO's sobering outlook reminded investors that the company's troubles are far from over.

Commodities were led lower by oil after a bigger-than-expected buildup in U.S. crude stockpiles. Government bonds rallied as investors sought out defensive assets after the OECD said the global economy is suffering from trade tensions and political uncertainty.

Trade remains high on investors' agenda as they wait for details of a possible accord, with President Donald Trump said to be pressuring U.S. negotiators to cut a deal with China soon in hope of fueling a market rally. Meanwhile, bond traders are taking a more cautious stance as Morgan Stanley predicted benchmark Treasury yields will drop as low as 2.35 percent by the end of the year. Traders will also get plenty to ponder from the European Central Bank's policy decision and the monthly U.S. jobs report later this week.

“The possibility of a soft landing of this economy throughout the course of 2019 is still in play, but every data point now is watched with extreme focus and what you're seeing is markets are not giving it the benefit of the doubt,” said Matthew Miskin, a market strategist at John Hancock Investments in Boston.

European shares edged lower after an initial spike following a report that central bank officials are poised to cut their economic forecasts by enough to justify another round of loans for banks. Canada's dollar extended losses after the Bank of Canada toned down its conviction that interest rates will need to go higher.

Elsewhere, the Australian dollar sank amid growing bets on interest-rate cuts. Chinese shares outperformed and Japanese equities dropped. Turkey's lira weakened after the country's central bank held its policy rate unchanged.

Here are some key events coming up:

• European Central Bank policy makers are expected to leave rates unchanged amid a deteriorating outlook. President Mario Draghi will hold a news conference on Thursday after the decision.
• The U.S. jobs report Friday may show hiring moderated in February. Nonfarm payrolls may have increased by 185,000 while the jobless rate fell to 3.9 percent, according to estimates.

These are the latest moves in markets:

Stocks

• The S&P 500 Index fell 0.7 percent at the close of trading in New York.
• The Stoxx Europe 600 Index fell less than 0.05 percent.
• The MSCI Emerging Market Index was little changed.

Currencies

• The Bloomberg Dollar Spot Index added 0.2 percent, hitting the highest in three weeks with its sixth straight advance.
• The euro was little changed at $1.1311.
• The Japanese yen increased 0.1 percent to 111.77 per dollar.

Bonds

• The yield on 10-year Treasuries fell three basis points to 2.68 percent.
• Germany's 10-year yield fell four basis points to 0.12 percent.
• Britain's 10-year yield declined six basis points to 1.22 percent.

Commodities

• The Bloomberg Commodity Index declined 0.6 percent.
• WTI crude fell 0.6 percent to $56.22 a barrel.
• Copper fell 0.3 percent to $2.925 a pound.
• Gold dipped 0.1 percent to $1,286.83 an ounce.

--With assistance from Cormac Mullen, John Ainger, Sid Verma, Adam Haigh, Carlyann Edwards, Eddie van der Walt, Christopher Anstey and Robert Brand.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Reade Pickert in New York at epickert@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Brendan Walsh

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