Stocks Fall After Fed Flags Risk; Treasuries Climb: Markets Wrap

(Bloomberg) — Stocks fell across much of the world after the Federal Reserve signaled continued concern over the pandemic weighing on the world’s biggest economy. Treasuries advanced.

Nvidia Corp. dropped in pre-market trading after warning that growth will slow in its data-center business. S&P 500 and Nasdaq 100 futures slipped, pointing to another weak session after Fed minutes of a July meeting said the virus posed “considerable risks” to the economic outlook over the medium term. Declines in industrial companies led the Stoxx Europe 600 Index lower.

The euro fell against the pound before the release of European Central Bank meeting minutes and policymakers’ prognosis for economic recovery. The dollar held Wednesday’s surge versus its biggest peers, while gold maintained yesterday’s drop.

Equities in several continents are seeing fresh weakness as investors debate whether momentum that pushed the S&P 500 to a record high this week can be sustained amid lofty valuations and uncertainties over further stimulus to counter the pandemic. Investors will see the latest weekly unemployment figures for the U.S. later on Thursday.

“There is still a fair amount of uncertainty around the path of the coronavirus, through the flu season, and what that may mean for economic growth,” Jim McDonald, chief investment strategist at Northern Trust, said on Bloomberg TV. “Stocks are somewhat expensive here — we struggle to get to a meaningful positive return on stocks over the next year just because we’ve priced in so much of a recovery already.”

U.S. Congressional leaders hinted they were looking for a path toward reviving stalled talks on the next round of pandemic relief — even as both sides remain far from a deal. Any accord is still likely to wait until September despite the fact that the U.S. economy is limping along with many businesses still struggling and millions of Americans out of work.

Elsewhere, Hong Kong stocks fell for a second session as the U.S. suspended its extradition treaty with Hong Kong and ended reciprocal tax treatment with the former British colony. An Asian MSCI equities benchmark headed for its biggest drop since mid-July.

Oil declined from a five-month high in New York with the Fed and OPEC+ sounding caution on the demand recovery.

Here are some key events coming up:

U.S. jobless claims for the week ended Aug. 15 are due Thursday.Euro-area PMIs will be released on Friday.

These are some of the main moves in markets:

Stocks

Futures on the S&P 500 Index decreased 0.3% as of 6:32 a.m. New York time.Nasdaq 100 Index futures were little changed.The Stoxx Europe 600 Index dipped 0.8%.The MSCI Asia Pacific Index decreased 1.5%.

Currencies

The Bloomberg Dollar Spot Index was little changed.Sterling strengthened 0.2% to 0.9021 per euro.The Japanese yen strengthened 0.1% to 105.98 per dollar.The South Korean Won weakened 0.5% to 1,186.94 per dollar.

Bonds

The yield on 10-year Treasuries dipped three basis points to 0.65%.The yield on two-year Treasuries fell one basis point to 0.13%.Britain’s 10-year yield decreased two basis points to 0.222%.Germany’s 10-year yield dipped two basis points to -0.49%.

Commodities

West Texas Intermediate crude fell 1.1% to $42.44 a barrel.Gold weakened 0.1% to $1,927.55 an ounce.Silver strengthened 0.8% to $26.90 per ounce.LME zinc dipped 1% to $2,481 per metric ton.

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