Stocks Slide as Oil Tumbles, Dollar Strengthens: Markets Wrap

  • Dow average falls to two-month low as IBM sales miss
  • Crude slides toward $50 a barrel, commodity currencies drop

London & Capital's Shah Sees Good Recovery in Europe

U.S. stocks retreated as a plunge in the price of crude offset gains sparked by corporate results. The dollar strengthened and Treasuries fell as demand for havens sparked by geopolitical concerns faded.

IBM Corp. slid the most since June after sales missed estimates, dragging the Dow Jones Industrial Average to its lowest close in two months. The S&P 500 Index turned lower after crude fell toward $50 a barrel in New York amid data showing a rise gasoline supplies. The 10-year Treasury yield moved above 2.20 percent, while the dollar jumped the most in six weeks. Mexico’s peso slumped.

The drop in U.S. equities overshadowed an otherwise moderately optimistic tone on markets a day after Theresa May’s call for a snap election added another macro risk to investors’ watch lists. The Federal Reserve reported the economy continued to grow steadily, though consumer spending was mixed, adding to signs that inflationary pressures have eased. Fed Vice Chairman Stanley Fischer painted a picture of a brightening global economy that can better manage the spillover of gradual monetary tightening in the U.S.

U.S. corporate earnings have so far done little to alter views on the strength of the world’s largest economy, with banks delivering mixed results and IBM missing on its sales estimate. In late trading Wednesday, American Express Co. climbed after topping profit forecasts, while EBay Inc. slid.

Read our Markets Live blog here.

Here’s what investors are watching:

  • The first round of voting in the French election is on Sunday and the two leading candidates will run off in a winner-takes-all contest on May 7.

Stocks

  • The S&P 500 fell 0.2 percent to 2,338.17 at 4 p.m. in New York. The index erased gains as energy shares turned lower following government data that sent crude lower.
  • The Dow closed at the lowest since Feb. 10, while earnings at Intuitive Surgical Inc. and Lam Research Corp. helped the Nasdaq Composite Index climb.
  • Morgan Stanley rose after results topped estimates on a jump in fixed-income revenue.
  • IBM slumped in after its 20th consecutive quarterly sales decline.
  • EBay dropped 2.7 percent as of 4:22 p.m., while American Express added 2.3 percent.
  • The Stoxx Europe 600 increased 0.2 percent after dropping 1.1 percent on Tuesday.  

Currencies

  • The Bloomberg Dollar Spot Index rose 0.4 percent, most since March 2.
  • The yen dropped 0.4 percent to 108.86 per dollar after gaining 0.5 percent Tuesday.
  • The pound fell 0.5 percent to $1.2783 after surging 2.2 percent a day earlier on May’s call for an election. The euro was little changed at $1.0726.
  • The peso fell 1.4 percent to 18.8573 per dollar.

Bonds

  • The yield on 10-year Treasuries rose four basis points to 2.21 percent after an eight-basis-point plunge Tuesday.
  • The yield on German notes due in a decade also increased five basis points to 0.20 percent.

Commodities

  • Gold futures declined 1 percent to $1,281.50 an ounce after closing at the highest since November in the previous session.
  • West Texas Intermediate crude oil dropped 3.5 percent to $50.57 a barrel in New York.
  • Gasoline inventories rose 1.54 million barrels last week, surprising analysts surveyed by Bloomberg who projected the Energy Information Administration data would show a 2-million-barrel decline. Crude inventories fell 1.03 million barrels to 532.3 million last week.

— With assistance by Adam Haigh, V Ramakrishnan, Cecile Gutscher, George Lei, Dennis Pettit, and Mark Shenk

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