Stocks decline, Treasuries advance after weak data

Bloomberg

US stocks fell, while Treasuries rose after a key gauge of manufacturing posted the weakest reading since the end of the last recession. Gold turned higher along with the yen.
The S&P 500 declined for the third time in four sessions, erasing an earlier advance more than 0.5 percent, after the Institute for Supply Management’s factory index slipped to the lowest since June 2009. Banks led the decline as rates moved lower, followed by industrial companies, while tech strength supported indexes. The 10-year Treasury yield tumbled to 1.64 percent, and the dollar trimmed its earlier advance against major peers.
“We are clearly seeing a very weak backdrop for manufacturing. The concern is the contagion effect into the services economy which is the driving force of the US economy,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
“But we cannot take this lightly and we think the Fed shouldn’t take it lightly either seeing the weakening of activity in the US in addition to frankly the numbers that came out overnight in Europe.”
The weak US factory gauge on the heels similarly disappointing numbers out of Europe on Tuesday, renewed concerns about an economic slowdown and sparked another round of speculation about how much the Federal Reserve may cut this year.
The data puts the Fed back in focus amid a slew of speakers this week, which includes Chairman Jerome Powell on Friday, and will heighten investors’ attention on the jobs report on Friday.
Elsewhere, European shares extended declines following data that showed the region’s manufacturing sector slumped last month and inflation slowed. The pound declined as British PM Boris Johnson prepared to present his blueprint for a new Brexit deal to the European Union. West Texas oil climbed.
Asian markets were subdued as Hong Kong and China were closed for holidays, while Australia’s dollar slid after the central bank cut its benchmark interest rate to a record low.
There’s a slew of US numbers this week, including the ADP employment report on Wednesday and the monthly jobs report on Friday. Federal Reserve Chairman Jerome Powell set to speak on Friday. The Reserve Bank of India sets policy on Friday.
The S&P 500 Index fell 0.3 percent in New York. The Nasdaq Composite Index fell 0.1 percent. The Stoxx Europe 600 Index sank 1.1 percent. The UK’s FTSE 100 Index fell 0.6 percent. The MSCI Asia Pacific Index gained 0.3 percent. The MSCI Emerging Market Index declined 0.3 percent.
The Bloomberg Dollar Spot Index rose 0.1 percent. The euro dipped 0.2 percent to $1.0916.
The British pound decreased 0.4 percent to $1.2242. The Japanese yen rose 0.2 percent to 107.86 per dollar.
The yield on 10-year Treasuries fell two basis points to 1.64 percent. Germany’s 10-year yield rose one basis point to -0.56 percent. Britain’s 10-year yield fell one basis point to 0.476 percent.
Gold rose 0.9 percent to $1,486.70 an ounce. West Texas Intermediate crude gained 0.4 percent to $54.29 a barrel.