U.S. stocks declined as a selloff in technology stocks resumed and Nasdaq fell amid the threat of persistently high inflation.
The S&P 500 fell more than 1% — dipping below its 100-day moving average — while the Nasdaq 100 fell more than 2%.
The losses were led by high-growth technology companies — including Amazon.com Inc. and Facebook Inc. — while vaccine makers were also lower on Merck & Co.’s announcement about an effective Covid-19 drug. Energy and materials stocks, meanwhile, were higher along with commodity prices.
“There’s a wall of worry that markets are trying to climb at the moment,” said Deutsche Bank strategist Jim Reid in a note. “We have an energy crisis, supply chain issues, higher inflation, signs of weaker growth, and lots of talk about stagflation.”
Global markets have taken a risk-off turn amid a growing list of worries, just as investors have been bracing for the Federal Reserve to begin tapering stimulus as early as next month. A spreading energy crunch, in particular, has added to concerns elevated inflation will be longer-lasting than policy makers predict.
In Europe, the energy crisis worsen Monday with power and gas prices surging before the onset of winter. The power contract for November in Germany hit a record while natural-gas futures also extended a rally. Meanwhile, crude oil surged in New York as OPEC+ agreed to a output hike for November.
“The post-pandemic recovery appears to be stumbling,” said Fiona Cincotta, senior financial markets analyst at City Index. “Supply shortages and a worsening energy crunch mean prices are rising and elevated inflation may not be as transitory as the Fed initially thought.”
The yield on 10-year Treasury rose while the dollar slid for a third day.
In Europe, equities fell, following Japan and Hong Kong stocks lower after the trading of shares of the debt-ridden China Evergrande Group was suspended in Hong Kong, along with those of its property management arm, amid reports of a unit stake sale. Mainland Chinese markets are closed through Thursday for the Golden Week holidays.
- OPEC+ meets virtually Monday to review output policy amid a global energy crunch.
- Reserve Bank of Australia policy decision Tuesday
- Rate decision in New Zealand on Wednesday
- Reserve Bank of India monetary policy decision on Friday
- The U.S. Labor Department releases unemployment and job creation data Friday
- Annual Nobel announcements start on Monday, with the Peace Prize being awarded on Friday
Some of the main moves in markets:
- The S&P 500 fell 1.3% as of 10:41 a.m. New York time
- The Nasdaq 100 fell 2.2%
- The Dow Jones Industrial Average fell 1%
- The Stoxx Europe 600 fell 0.4%
- The MSCI World index fell 1%
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $1.1634
- The British pound rose 0.6% to $1.3625
- The Japanese yen rose 0.1% to 110.90 per dollar
- The yield on 10-year Treasuries advanced one basis point to 1.48%
- Germany’s 10-year yield was little changed at -0.22%
- Britain’s 10-year yield was little changed at 1.00%
- West Texas Intermediate crude rose 2.9% to $78.07 a barrel
- Gold futures rose 0.6% to $1,768.50 an ounce