(Bloomberg) — Volatility gripped financial markets as a selloff in some of the world’s largest technology companies dragged down stocks. Treasuries climbed with the dollar.
The S&P 500 headed toward its worst day since mid March, while the Nasdaq 100 sank 2% amid a rout in megacaps Apple Inc., Tesla Inc. and Amazon.com Inc. CVS Health Corp. climbed after raising its full-year forecast as Covid-19 vaccines and testing helped boost first-quarter results and offset a weak cold and flu season.
A sharp drop in equity futures earlier Tuesday left traders scrambling for reasons to explain the move. The catalyst behind the decline was unclear, but investors speculated on military tensions between China and Taiwan, Singapore’s tougher lockdown and Ferrari NV’s decision to postpone financial targets.
For several analysts, though, the reason could be simple: stocks are hovering near-all time highs and have struggled to gain much traction despite a blockbuster earnings season.
“We’ve had this spectacular run-up, and I think we’ve seen momentum just run out of steam,” said Fiona Cincotta, senior financial markets analyst at City Index. “Despite earnings being encouraging, they haven’t managed to push those indices higher. Moving out of growth and into cyclicals is the place we’re going to have more movement.”
Data Tuesday showed that the U.S. trade deficit widened to a new record in March as the value of imports surged to a fresh high. Investors will also be watching the latest readings on factory orders and durable goods.
Here are some key events to watch this week:
U.S. ADP employment change is due WednesdayChicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic ClubBank of England rate decision ThursdayThe April U.S. employment report is released on Friday
These are some of the main moves in markets:
The S&P 500 fell 1.1% as of 10:16 a.m. New York timeThe Nasdaq 100 fell 2%The Dow Jones Industrial Average fell 0.7%The Stoxx Europe 600 fell 1.3%The MSCI World index fell 1.1%
The Bloomberg Dollar Spot Index rose 0.3%The euro fell 0.3% to $1.2025The British pound fell 0.4% to $1.3859The Japanese yen was little changed at 109.12 per dollar
The yield on 10-year Treasuries declined four basis points to 1.56%Germany’s 10-year yield declined four basis points to -0.25%Britain’s 10-year yield declined five basis points to 0.79%
West Texas Intermediate crude rose 1% to $65 a barrelGold futures rose 0.3% to $1,796 an ounce
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