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U.S. Stocks Decline as Oil Tumbles, Bonds Advance: Markets Wrap

Bloomberg logoBloomberg 3/23/2021 Vildana Hajric

(Bloomberg) -- U.S. equities fell, with companies that would benefit from an end to lockdowns faring the worst, amid concern that rising virus cases and new restrictions in Germany signal the global reopening will be delayed.

The S&P 500 Index slumped and the small-cap Russell 2000 dropped 3.6% as beneficiaries of the reopening trade including Carnival Corp. and TripAdvisor Inc. tumbled. An index of airline shares fell the most since October.

The dollar strengthened, while the 10-year U.S. Treasury yield slid for a second day after Federal Reserve Chairman Jerome Powell played down the risk that economic growth would spur unwanted inflation. Oil dropped below $60 a barrel on concern the market is oversupplied.

chart: UBS calculates problem inflation levels for different types of stocks © Bloomberg UBS calculates problem inflation levels for different types of stocks

While setbacks in the coronavirus fight are putting investors on the back foot, the stabilization in bond yields is providing some relief against fears that heavy U.S. spending could reignite inflation and force tighter central-bank policy. Investors also took stock of equity gains on the one-year anniversary of the S&P 500’s bear-market bottom. The gauge has surged about 75% since then.

“When you consider how far we’ve come it is truly staggering,” said Chris Larkin, managing director of trading and investing product at E*Trade Financial. “The market today has some jitters as it considers what a return to normal means for easy money policies, fiscal support, and interest rates, but for any investor thinking we’re poised for a drop, it’s important to remember that the market is going through historically healthy growing pains and there is still a lot more recovery ahead of us.”

Elsewhere, European shares slumped after Chancellor Angela Merkel put Germany into lockdown over Easter to try to defuse another wave of coronavirus infections. Asian shares also declined.

These are some key events to watch this week:

The U.S. Treasury holds auctions of five- and seven-year debt.EIA crude oil inventory report on Wednesday.U.S. personal income and spending data on Friday.

These are some of the main moves in financial markets:

Stocks

The S&P 500 Index fell 0.8% as of 4 p.m. New York time.The Stoxx Europe 600 Index decreased 0.2%.The MSCI Asia Pacific Index decreased 0.9%.The MSCI Emerging Market Index fell 1.1%.

Currencies

The Bloomberg Dollar Spot Index gained 0.6%.The euro fell 0.7% to $1.1849.The British pound weakened 0.8% to $1.3752.The Japanese yen strengthened 0.2% to 108.62 per dollar.

Bonds

The yield on 10-year Treasuries fell eight basis points to 1.62%.Germany’s 10-year yield dropped three basis points to -0.34%.Britain’s 10-year yield declined five basis points to 0.76%.

Commodities

West Texas Intermediate crude declined 6.6% to $57.48 a barrel.Gold fell 0.6% to $1,727.75 an ounce.

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