U.S. Stocks Drop Most In a Month; Dollar Advances: Markets Wrap

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U.S. shares retreated as investors sought details of a possible trade deal between the White House and China. The dollar strengthened and Treasury yields slipped.

The S&P 500 Index slumped the most since Feb. 7, with financial and health-care shares pacing declines, after the benchmark gauge again failed to hold gains that took it past the 2,800 level. The yuan edged higher after reports on the trade deal, which was said to require Beijing to follow through on pledges ranging from better protecting intellectual-property rights to buying more U.S. products. The dollar firmed against most major peers even after U.S. President Donald Trump warned against it becoming too strong.

After soaring 18 percent from Christmas to mid-February, the S&P 500 has struggled to extend gains past highs achieved in October and November, with advances petering out near 2,800. It climbed as far as 2,816 Monday on trade optimism before falling back below the round-number level. Investors focused on the outlook for global growth weren't that impressed after China was said to plan a 3 percentage-point cut to its VAT tax rate for manufacturing to support its economy, which Morgan Stanley estimated could add 0.6 percent to expansion. Investors will get the latest read on the U.S. economy with the monthly jobs report Friday.

“The fact that we're seeing diminishing returns every time one of these sort of good-news stories comes out over the weekend tells me that” a U.S.-China trade deal is now mostly priced in, Brian Nick, the chief investment strategist at Nuveen, said on Bloomberg Television.

Elsewhere, European stocks edged higher after gains in Asia. The pound slipped even amid optimism U.K. lawmakers are avoiding a hard Brexit by moving toward supporting Prime Minister Theresa May's proposed deal. West Texas oil climbed above $56 a barrel on signs of slowing U.S. production growth and as OPEC and its allies deepened cutbacks, while gold and copper fell.

Here are some key events coming up:

• China's National People's Congress opens in Beijing on Tuesday. Premier Li Keqiang will announce an economic growth target. The Chinese People's Political Consultative Conference runs concurrently. Through March 15.
• Australia's central bank sets policy on Tuesday, then Governor Philip Lowe will give a speech on the housing market Wednesday.
• Bank of Canada Governor Stephen Poloz is expected to keep rates on hold Wednesday due to lingering uncertainty on housing and investment, while sticking to his message that borrowing costs eventually need to head higher.
• 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 slumped 0.4 percent at the close in New York.
• The Nasdaq 100 was little changed and the Dow Jones Industrial Average lost 0.8 percent.
• The Stoxx Europe 600 Index added 0.2 percent.
• The Nikkei-225 Stock Average advanced 1 percent to a three-month high.
• The MSCI Emerging Market Index rose 0.2 percent.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1 percent.
• The euro weakened 0.2 percent to $1.1342.
• The British pound fell 0.2 percent to $1.3175.
• The Japanese yen rose 0.2 percent to 111.7 per dollar.
• The offshore yuan rose less than 0.1 percent to 6.7091 per dollar.

Bonds

• The yield on 10-year Treasuries fell three basis points to 2.72 percent.
• Germany's 10-year yield fell three basis points to 0.16 percent.
• Britain's 10-year yield fell two basis points to 1.27 percent.

Commodities

• The Bloomberg Commodity Index fell 0.2 percent.
• Copper fell 0.7 percent to $2.9115 per pound.
• West Texas Intermediate crude climbed 1.3 percent to $56.42 a barrel.

--With assistance from Adam Haigh, Christopher Anstey, Todd White, Eddie van der Walt and Sarah Ponczek.

To contact the reporters on this story: Reade Pickert in New York at epickert@bloomberg.net;Luke Kawa in New York at lkawa@bloomberg.net

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

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