Stocks Slide as Dollar, Treasuries Gain on Economic Concerns
March 10 (Bloomberg) -- Stocks slid, while the dollar and Treasuries gained, as U.S. jobless claims rose, China's export growth slowed and Spain's credit rating was cut. Equities extended losses and oil pared declines as the Associated Press reported Saudi Arabian police fired into a crowd of protesters.
The Standard & Poor's 500 Index retreated 1.7 percent to 1,297.35 at 1:37 p.m. in New York. The Stoxx Europe 600 Index sank 1.2 percent to 277.88, its lowest close of the year. The Dollar Index, which tracks the currency against six major peers, rose 0.6 percent. Crude slipped 1.2 percent after tumbling as much as 3.6 percent earlier. Treasuries extended gains after a 30-year bond auction produced the highest demand since 2000. The euro fell to $1.3803 as the dollar gained against all 16 peers.
Investors fled riskier assets after first-time applications for U.S. unemployment benefits and the American trade deficit topped economists' estimates, China's export growth was the slowest since 2009 and German exports dropped 1 percent in January from December. The Bank of Korea raised borrowing costs after inflation exceeded its target. Moody's Investors Service cut Spain's rating by one level to Aa2, saying the government underestimated the cost of shoring up its banking industry.
"We may be seeing indications of an economic slowdown," said Donald Selkin, the New York-based chief market strategist at National Securities Corp., which manages $3 billion. "The market has been whistling past the graveyard of higher oil prices and consumers pulling back, but now it's starting to weigh down on stocks and we've probably seen the highs until we get first-quarter earnings results in April. The only thing that is going up today is the bond market as people run to safety."
Jobless Claims, Trade Deficits
The S&P 500 fell for the fourth time in five days, with energy and commodity producers falling more than 1.4 percent to lead declines among all 10 industry groups. Caterpillar Inc. and General Electric Co. slumped at least 1.8 percent, pacing losses among industrial companies, and 27 of 30 stocks in the Dow Jones Industrial Average fell.
The S&P 500 has retreated 3 percent from its high for the year on Feb. 18 amid concern higher oil prices will stifle the economic recovery. The gauge is trading near its average from the past 50 days, according to data compiled by Bloomberg. The S&P 500 hasn't closed below that threshold, a level watched by analysts who make forecasts based on chart patterns, since Sept. 1. The index has rallied 93 percent from its bear-market low in March 2009.
'Corrective Phase'
"The down move we're seeing today is a corrective phase within a longer-term uptrend," said Christopher Verrone, lead technical analyst at New York-based Strategas Research Partners. "The integrity of the uptrend since the 2009 low is still intact, but if the 1,294-level on the S&P 500 fails to hold in the next couple of days, we'll probably come down to 1,260. And that's a range which we would look at as a buying opportunity."
Applications for first-time unemployment benefits increased by 26,000 to 397,000 in the week ended March 5, Labor Department figures showed. Economists forecast claims would climb to 376,000, according to the median estimate in a Bloomberg News survey.
The U.S. trade deficit widened to the highest level in seven months as a surge in imports led by costlier crude oil overshadowed record exports. The gap increased 15 percent to $46.3 billion, from $40.3 billion in December, Commerce Department figures showed. Imports jumped 5.2 percent, the most since 1993, while exports grew 2.7 percent. The deficit was wider than the most pessimistic forecast in a Bloomberg survey.
Treasury Yields
The yield on the 10-year U.S. Treasury note slipped four basis points to 3.43 percent. U.S. debt extended gains after the government sold $13 billion of 30-year bonds, the final of three note and bond auctions this week totaling $66 billion.
The 30-year bond yield dropped five basis points to 4.57 percent. The securities sold today yielded 4.569 percent, compared with an average forecast of 4.610 percent in a Bloomberg News survey of 7 of the Federal Reserve's 20 primary dealers. The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 3.02, compared with an average of 2.66 at the last 10 auctions.
The cost of protecting corporate bonds from default in the U.S. climbed. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, rose 1 basis point to a mid-price of 85.78 basis points, according to index administrator Markit Group Ltd. The cost to protect debt from Morgan Stanley, Bank of America Corp., Goldman Sachs Group Inc. and Merrill Lynch & Co. climbed.
European Shares
Six stocks dropped for each that gained in the Stoxx 600. Rio Tinto Group and BHP Billiton Ltd. helped lead basic-resource producers to the biggest decline among 19 industry groups. Home Retail Group Plc sank 5.9 percent as the owner of the Homebase do-it-yourself store chain lowered its profit forecast. The MSCI Asia Pacific Index and China's Shanghai Composite Index tumbled at least 1.5 percent.
The dollar appreciated against all of its 16 most-traded counterparts, gaining 0.3 percent to 82.98 yen. The pound slid against 13 of 16 major peers as the Bank of England policymakers kept the benchmark rate at a record 0.5 percent low.
The Australian dollar depreciated against all but two of its most actively traded peers after the nation's employers unexpectedly cut workers in February for the first time in 18 months as floods and a cyclone disrupted hiring in the nation's northeast.
Copper declined 0.3 percent to $4.1960 a pound in New York, below its lowest settlement price since Dec. 17. Crude oil traded in New York fell 1.2 percent to $103.16 a barrel. In London, Brent oil retreated 1.4 percent to $114.30. The Thomson Reuters/Jefferies CRB index of commodities slumped 1.9 percent, the most on a closing basis since Nov. 16.
To contact the reporters on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net .
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net .
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