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Stocks Slump as Facebook Data Controversy Hits Tech; Bonds Recover

Stocks Slump as Facebook Data Controversy Hits Tech; Bonds Recover
(AP)

Monday, 19 March 2018 04:26 PM

Stocks declined globally on Monday as a technology selloff sent the Nasdaq indexes to the steepest losses in six weeks. Government bonds pared losses, while the pound jumped on a Brexit breakthrough.

U.S. stocks slumped as tech companies were roiled by reports of a Facebook Inc. data breach and Apple Inc. efforts to develop its own screens. That sapped Asian equities, while tech also led a retreat for the Stoxx Europe 600 Index. Facebook fell the most in almost four years. The tech rout added to pressure that had mounted over the weekend in Washington, as speculation grew that President Donald Trump could be preparing to fire Robert Mueller.

“If the Facebook news didn’t exist there would be all sorts of jitters here just given the Trump stuff,” said Michael Purves, Weeden & Co.’s chief global strategist. “If the regulatory clouds come on Facebook, certainly Google and Amazon will face increasing questions about their ability to generate outsized earnings growth if the regulators are going to be beating them.”

Meanwhile, large digital companies operating in the European Union, such as Alphabet Inc. or Twitter Inc., could face a 3 percent tax on their gross revenues based on where their users are located, according to a draft proposal by the European Commission.

Sterling rallied as the U.K. and EU reached a deal on the transition agreement for the period immediately after Brexit.

In a busy week, the biggest focus for global markets will be the first U.S. interest rate decision under new Federal Reserve Chairman Jerome Powell. It comes after he hinted to investors that he’s open to lifting the policy rate four times this year, rather than the three currently reflected in dot-plot forecasts. Some Wall Street banks such as Goldman Sachs Group Inc. expect the median projection to rise to four on Wednesday, while others say there will be no change following a round of mediocre data and policy makers’ stated intentions to move gradually.

“Today’s a combination of a little bit of nervousness ahead of Fed activity later in the week and then also tech getting hit,” said Craig Birk, an executive vice president of portfolio management at Personal Capital in San Francisco.

Trade tensions also remain in the spotlight as U.S. Treasury official David Malpass said he misspoke hours after claiming America was pulling out of decade-old formal economic talks with Beijing. Meanwhile, investors are assessing the implications of a new head at China’s central bank.

Elsewhere, the ruble weakened for a sixth day, the longest losing streak since October, as Russian President Vladimir Putin won a landslide victory in a tightly controlled election. West Texas oil edged lower and gold gained for the first time in four days.

Here are some key calendar events coming up this week:

  • The Fed decision and Powell’s news conference come on Wednesday.
  • The Bank of England is expected to keep interest rates and its asset-purchase program unchanged on Thursday. Attention will be on language and the odds for a May hike.
  • Saudi Crown Prince Mohammed bin Salman is expected to meet with President Donald Trump at the White House this week as part of a U.S. visit.
  • Company earnings scheduled for this week include Tencent, FedEx, Porsche, Hermes, PetroChina and Nike.

And these are the main moves in markets:

Stocks

  • The S&P 500 Index fell 1.4 percent to 2,712.92 as of 4:04 p.m. New York time, while the Dow Jones Industrial Average dropped 1.4 percent to 24,610.91 and the Nasdaq Composite Index dipped 1.8 percent to 7,344.24.
  • The Stoxx Europe 600 Index fell 1.1 percent and the MSCI Asia Pacific Index decreased 0.8 percent on the largest dip in two weeks.
  • The U.K.’s FTSE 100 Index sank 1.7 percent on the biggest tumble in more than a month.
  • The MSCI Emerging Market Index sank 0.8 percent, the fourth consecutive close lower.

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2 percent, the first drop in three days.
  • The euro climbed 0.4 percent to $1.2341.
  • The British pound climbed 0.7 percent to $1.403, the biggest increase in almost eight weeks.
  • The Japanese yen was little changed at 106.11 per dollar.
  • South Africa’s rand sank 0.4 percent to 12.02 per dollar, after touching the weakest level in more than five weeks.
  • The MSCI Emerging Markets Currency Index sank 0.2 percent on the largest decrease in more than a week.

Bonds

  • The yield on 10-year Treasuries were little changed at 2.85 percent, after rising as much as three basis points.
  • Germany’s 10-year yield was little changed at 0.57 percent, after posting the largest climb in almost two weeks.
  • Britain’s 10-year yield climbed two basis points to 1.44 percent, after seeing the biggest surge in almost 11 weeks.

Commodities

  • West Texas Intermediate crude for April delivery, which expires on Tuesday, dropped 28 cents to settle at $62.06 a barrel on the New York Mercantile Exchange.
  • Gold rose 0.2 percent to $1,317.06 an ounce.

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Stocks declined globally on Monday as a technology selloff sent the Nasdaq indexes to the steepest losses in six weeks. Government bonds pared losses, while the pound jumped on a Brexit breakthrough.
facebook, stock, decline, markets
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2018-26-19
Monday, 19 March 2018 04:26 PM
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