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US stocks slip from record as dollar advances

Apr 24 2019 16:19
Eddie van der Walt and Brendan Walsh, Bloomberg

US equities edged lower along with European stocks as investors assessed corporate earnings and economic data. Treasuries joined a global rally in sovereign bonds and the dollar extended its rally to a six-week high.

The S&P 500 Index slipped after the gauge closed at a record Tuesday. AT&T and Caterpillar fell after reporting first-quarter results, while Boeing rose.

The Stoxx Europe 600 Index threatened to snap the longest run of gains since 2017. The euro fell after key gauges of confidence in the EU’s two largest economies unexpectedly deteriorated.

US stocks have been on a tear since late last year, but the fresh record Tuesday appears to have triggered some soul-searching among investors.

Although about 80% of S&P 500 companies reporting results so far have exceeded estimates, some are starting to question whether the rally has legs. Positive earnings surprises in Europe, meanwhile, have done little to erase lingering concerns about the region’s economic outlook. Still ahead is US first-quarter gross domestic product data due on Friday.

"We’ve had a big run higher, we’ve tested record highs in the US, and maybe this is time for consolidation," said Jasper Lawler, the head of research at London Capital Group. "Everything has been baked into the market already. We’re probably over the next quarter looking at a more sideways environment for equities."

Asian stock gauges were mixed Wednesday. In China, markets got little help from the central bank’s move to support liquidity in the banking system by injecting the equivalent of about $40bn in medium-term loans.

The People's Bank Of China has refrained from stronger measures, such as lowering benchmark lending rates, as an upturn in economic data reduces the pressure for more stimulus.

Elsewhere, the pound was steady as UK Prime Minister Theresa May pushed to get Brexit a deal through Parliament by the end of the month. Emerging-market currencies and shares edged lower.

Here are some notable events coming up:

A Who’s Who of the tech world reports this week, with Amazon, Facebook and Microsoft among the heavy hitters on tap.

European bank earnings kick into full gear with reports from Deutsche Bank, UBS, Barclays and Swedbank. The Bank of Japan, Bank of Canada, Bank of Russia, Sweden’s Riksbank and Bank of Indonesia set monetary policy.

Japan’s Shinzo Abe meets leaders of the European Union Thursday before flying to the US for a summit with President Donald Trump.

The initial print on first-quarter US GDP Friday will be closely watched for clues as to how the economy responded to the government shutdown and fallout from the fourth-quarter market rout.

These are the main market moves:

Stocks

The S&P 500 Index fell 0.2% as of 09:47 in New York. The Stoxx Europe 600 Index fell 0.2%, the first retreat in two weeks. The MSCI Asia Pacific Index fell 0.4%. The MSCI Emerging Market Index declined 0.6%.

Currencies

The Bloomberg Dollar Spot Index added 0.3%. The euro fell 0.2% to $1.1207, the weakest in more than three weeks. The Japanese yen was little changed at 111.88 per dollar. The British pound was little changed at $1.2934. The MSCI Emerging Markets Currency Index sank 0.3% to the lowest since March.

Bonds

The yield on 10-year Treasuries dipped four basis points to 2.53%. Germany’s 10-year yield declined five basis points to -0.01%. Britain’s 10-year yield decreased five basis points to 1.18%.

Commodities

The Bloomberg Commodity Index was little changed. West Texas crude fell 0.1% to $66.20 a barrel.

Copper rose 0.4% to $2.911 a pound. Gold declined 0.1% to $1,271.01 an ounce, the weakest in four months.

dollar  |  commodities  |  markets  |  currencies  |  us stocks
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