On Tuesday, benchmark Treasury rates and U.S. stocks both fell substantially as investors fled riskier assets in favor of safe havens due to weak economic data and disappointing results.
All three main indices were heavily in the red, with momentum stocks in the technology and closely related industries pushing the Nasdaq down by nearly 1.7 percent.
Following a study revealing a worse than anticipated decrease in consumer confidence, those losses increased.
“The type of environment where both gold and the dollar gain, it’s very much risk-off high-volatility stuff,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.
A variety of firms’ earnings, including those from 3M Co., General Motors Co., PepsiCo Inc., UPS Inc., and McDonald’s Inc., painted a contrasting image of corporate profit and outlook.
First Republic Bank, under pressure due to worries about regional banks’ liquidity, reported a drop in deposits, which caused its shares and the larger KBW regional banking index to fall precipitously.
“The more cyclical and economically sensitive companies have missed (earnings estimates) or guided down, while consumer staples have done well,” Mayfield said. And it reflects a deteriorating economic climate that maybe wasn’t anticipated by the market.
After the bell, Microsoft Corp. and Alphabet Inc. are scheduled to report.
The Nasdaq Composite plummeted 207.27 points, or 1.72 percent, to 11,829.93, the S&P 500 lost 59.56 points, or 1.44 percent, to 4,077.48, and the Dow Jones Industrial Average dropped 335.19 points, or 0.99 percent, to 33,540.21.
European equities fell as investors assessed largely positive results against statements made by officials at the European Central Bank on the direction interest rates may go in the future.
Santander led a decline in European bank shares, which caused Spanish markets to have their worst day in a month.
The global MSCI stock index fell 1.24 percent while the STOXX 600 index for all of Europe dropped 0.40 percent.
Stocks in emerging markets fell by 1.39 percent. The Nikkei in Japan increased 0.09 percent while MSCI’s largest index of Asia-Pacific equities outside of Japan finished 1.44 percent down.
Benchmark Treasury rates saw their biggest decline since March as market players balanced worries about the approaching debt limit deadline with continuing worries about a liquidity crisis in the local banking industry, which were made worse by First Republic data.
Treasury yield spreads are shown in the following graph: (https://www.reuters.com/graphics/USA-STOCKS/gkvlwalylpb/treasuryspreads.png)
Standard 10-year note prices recently increased 32/32 to a yield of 3.3958 percent, down from a late-Monday high of 3.515 percent.
A 47/32 increase in price brought the 30-year bond’s yield from 3.729 percent late on Monday to 3.6472 percent.
In contrast to the euro’s decline from a near 10-month high, the dollar strengthened versus a basket of other currencies as concerns about corporate earnings and the prospects for the global economy grew.
The euro fell by 0.69 percent to $1.0965 while the dollar index increased by 0.51 percent.
Sterling was last trading at $1.2401, down 0.65 percent on the day, while the Japanese yen gained 0.51 percent to 133.57 per dollar.
Argentina’s economic minister promised to use “all tools” to stop the currency’s perilous decline after the peso hit a record low on the widely used black market amid unrest around the nation’s impending election.
Crude prices lost Monday’s gains, falling as concerns about the economy and a strong currency outweighed hope for increased demand from China.
U.S. crude fell 2.25 percent to close at $77.07 a barrel, while Brent fell 2.37 percent to end at $80.77 per barrel.
As investors anticipated a flood of economic data later in the week that may influence the Federal Reserve’s policy choices, gold prices rose.
Spot gold increased by 0.3% to $1,995.46 per ounce.