U.S. Stocks Drop to April Low as Treasuries Rise; Dollar Slips

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U.S. stocks dropped to a two-month low, led by technology shares, while Treasuries rose and the dollar fell. European equities slid with bonds in the region as Group of Seven leaders pushed for resolution to Greece’s debt crisis.

The Standard & Poor’s 500 Index lost 0.7 percent by 4 p.m. in New York, dropping through its average price for the past 100 days. The Nasdaq 100 Index slid 1 percent, while the Dow Jones Industrial Average erased its gain for 2015. Treasuries rebounded from the worst weekly slide since February as the Bloomberg Dollar Spot Index slipped 1 percent. The Stoxx Europe 600 Index fell 0.9 percent, capping its longest run of daily losses this year as Germany’s DAX Index entered a correction.

Investors are mulling the timing of the Federal Reserve’s next policy move after data Friday showed a pickup in U.S. hiring, sending bonds lower and fueling gains in the dollar. The euro rallied for the first time in three days Monday as a selloff in European debt resumed, with higher yields burnishing the currency’s appeal. The G-7 called for action on Greece as talks between the nation and its creditors continued Monday.

“Equities have had such a good run until recently that people are taking a bit of risk off the table and standing on the sidelines deciding how to play this,” said Peter Dixon, an economist at Commerzbank AG in London. “Investors want to see stronger growth and they are still trying to figure out when the Fed is likely to move and that’s a good three months away.”

The S&P 500 slipped 0.7 percent last week, the sixth straight period with a move of less than 1 percent, as it pared its gain for the year to 1.7 percent. The jobs data bolstered optimism in the economy and fueled bets the Fed will raise interest rates this year.

Skittish Investors

Equities investors, already skittish amid the selloff in global bonds and signs Greece’s debt standoff could end in default, are weighing whether higher borrowing costs will snuff out a recovery in the U.S. that has been struggling to gain traction.

An index of airlines in the U.S. retreated into a bear market Monday amid concerns over capacity growth. Apple Inc. pared a drop of 1.4 percent, ending the day down 0.7 percent amid its developers conference. EBay Inc. sank after its PayPal unit trimmed its 2015 free-cash flow view. Wynn Resorts Ltd. lost 6.2 percent to weigh on consumer discretionary shares.

“We’re going to see a lot of this choppiness until the Fed makes the first move or we get some clarity,” Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC, said by phone. “It’s a combination of coming off Friday’s jobs number and higher levels of the market in general that are weighing on us, as well as some of what’s going on in Greece.”

Deutsche Climbs

The Stoxx 600 fell for a fifth day, its longest losing streak since December. Germany’s DAX gauge declined 10 percent from its April peak, extending its lowest level since February and entering the common market definition of a correction. Greece’s ASE Index sank 2.7 percent.

Deutsche Bank AG jumped 3.6 percent, the most since December, after John Cryan was named to replace Anshu Jain as co-chief executive officer.

“All the positive momentum factors that had driven markets are either gone or priced in,” said Hendrik Koenig, an equity strategist at B. Metzler Seel Sohn & Co. in Frankfurt. “We anticipated a correction, and the one for German stocks was definitely overdue. There could be some further downside risk here, especially if we have external shocks from the Greek situation or further strengthening of the euro.”

Bunds Slump

U.S. President Barack Obama put concerns over the Greek deadlock onto the agenda of the G-7 summit in southern Germany on Sunday. Greece deferred a payment to the IMF on Friday and needs to crack a deal or get another extension before its euro-area bailout package expires June 30.

Germany’s government bonds extended a selloff that pushed 10-year yields up last week by the most since 1998. Ten-year bund yields rose five basis points, or 0.05 percentage point, to 0.89 percent Monday. Similar-maturity Spanish rates climbed three basis points to 2.25 percent, while Greek yields added eight basis points to 11.30.

Treasuries rebounded after their biggest drop since February as the highest yields in 2015 lured back buyers. Rates on 10-year notes slipped three basis points to 2.38 percent.

The greenback dropped for the first time in three days versus the euro after a French official said Obama told fellow G-7 leaders that the strong greenback poses a problem. A U.S. official later denied the statement. The dollar dropped to $1.1291 per euro, and slipped 0.9 percent to 124.49 yen. New Zealand’s dollar surged 1.4 percent, the most since May 13.

Lira Sinks

The MSCI Emerging Markets Index slumped 0.5 percent for an 11th straight daily decline, its longest losing streak since September 1990.

Turkey’s lira weakened to a record-low 2.8096 per dollar before paring the drop, while the Borsa Istanbul 100 Index slid 5.1 percent, the most since December 2013, after the ruling AK Party fell short of a majority in parliamentary elections.

U.S. oil fell, extending its biggest weekly loss since March, on speculation a global surplus will persist. West Texas Intermediate for July delivery slipped 1.7 percent to $58.14 a barrel on the New York Mercantile Exchange.

Gold futures for August delivery rebounded from an 11-week low, rising 0.5 percent to settle at $1,173.60 an ounce in New York. On June 5, the price touched $1,162.10.

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