Crude Rout Drags Stocks Lower as Treasuries Slide: Markets Wrap

  • Greenback extends gain as ADP says job gains beat estimates
  • Crude slumps below $53 after data shows U.S. stockpiles grew

Rising Yields Might Signal an Imminent Fed Rate Hike

Crude oil sank to the lowest settlement of the year, touching off a drop in energy producers that dragged U.S. stocks to a third straight decline. U.S. Treasuries headed for the longest losing streak in five years as a private reading on U.S. payrolls exceeded expectations.

Record oil stockpiles showed cuts from OPEC have not reduced U.S. supplies, sending West Texas Intermediate crude toward $50 a barrel. The S&P 500 Index slid as energy producers tumbled more than 2 percent. The yield on 10-year U.S. notes climbed for an eighth day to reach 2.55 percent after ADP data indicated companies added the most workers in almost three years. The dollar strengthened for a third day.

With a rate increase being priced into the market as a near-certainty, bond yields are catching up with expectations for accelerating inflation. At the same time, price swings in bonds, currencies and stocks are all falling, signaling investors are sanguine about the prospects for global growth against the backdrop of higher borrowing costs. Crude has held above $50 a barrel since OPEC agreed to curb production.

Read our Markets Live blog here.

What’s ahead for the markets:

  • Mario Draghi is expected to keep QE going until the end of the year with underlying price pressures muted.
  • Official U.S. jobs data for February are due Friday. Employers probably added around 190,000 workers to payrolls, in line with the average over the past six months and a sign of steady job growth, economists forecast.

Here are the main moves in markets:

Stocks

  • The S&P 500 fell 0.2 percent to 2,363.05 as of 4 p.m. in New York, for a third straight loss, the longest slump since January.
  • Exxon Mobil Corp. and Chevron Corp. lost at least 1.7 percent to pace losses in the Dow Jones Industrial Average.
  • The Stoxx Europe 600 added 0.1 percent after four days of losses.

Currencies

  • The Bloomberg Dollar Spot Index strengthened 0.3 percent, extending two days of gains after data from the ADP Research Institute showed private payrolls climbed by 298,000, compared with the 187,000 median projection of analysts surveyed by Bloomberg.
  • The British pound slipped 0.3 percent to $1.2166, falling for a third day, and the euro fell 0.2 percent to $1.0543.

 
Bonds

  • Treasuries slumped, pushing 10-year yields to the highest since December. The rate rose four basis points to 2.55 percent. The yield reached 2.58 percent before strong demand for an auction of 10-year notes, awarded at the highest yield since July 2014.
  • German bonds dropped, following Treasuries, with 10-year yields rising five basis points to 0.37 percent. Long-dated French bonds dropped from the open with 10-year yields rising six basis points to 1.02 percent.

Commodities

  • West Texas Intermediate crude tumbled 5.4 percent percent to $50.28 a barrel, the lowest close since Dec. 7. Oil slumped more than 5 percent to the lowest close this year after government data showed production cuts from OPEC and other producers have not been enough to reduce U.S. supplies.
  • Gold for immediate delivery dropped 0.5 percent to $1,210.08 an ounce after earlier touching the lowest since Feb. 3.
  • Copper futures rebounded after a four-day slump. Metal for three-month delivery added 0.6 percent to $5,804 a metric ton.

— With assistance by Cecile Gutscher, Mark Burton, and Mark Shenk

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE