US stocks tumble as growth worries mount; bonds rally

Bloomberg

The sell-off in US stocks picked up steam as mixed corporate earnings and weak housing data fueled anxiety that rising prices will crimp economic growth. Treasuries rallied for a second day on demand for haven assets.
The S&P 500 Index extended its October rout to 7 percent, with the intraday low of 2,711 set during the Oct 11 drubbing acting as a support for bulls. Disappointing earnings from AT&T and Texas Instruments drove declines in the communications and semiconductor groups, offsetting a promising outlook from Boeing. The Dow Jones Industrial Average fell almost 300 points, and the Nasdaq Composite Index flirted with a correction.
Amid the flood of earnings that will bring reports from Microsoft Alphabet, Intel and Amazon.com, economic data continues to underwhelm, particularly on the rate-sensitive housing front. New home sales sank again, sending battered homebuilders lower.
Fragile market sentiment is also working through reports that potential bombs were sent to two former US presidents and the New York headquarters of CNN.
“There’s just right now a heightened sensitivity to what can go wrong,” Kate Warne, investment strategist at Edward D. Jones & Co., said in an interview at Bloomberg’s New York headquarters. “So we will have more of these days where stocks move a lot within the day as everyone’s trying to sort through what do today’s reports mean.”
European politics is also in focus, with Italian Prime Minister Giuseppe Conte doubling down on his government’s budget and UK Prime Minister Theresa May’s cabinet descending into conflict. The pound weakened, and the region’s bonds rallied. The euro dropped following disappointing manufacturing data. Retailers were the biggest winners in the Stoxx Europe 600 Index. A turnaround in China’s markets helped the MSCI Asia Pacific Index avoid a bear market even as it edged down.
“Right now markets are still trying to reprice,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. “What’s happening with earnings is exaggerating market moves.”
Elsewhere, oil rebounded after touching the lowest in almost two-months on a pledge by Saudi Arabia to meet any shortfall that materialises from Iranian sanctions. Emerging-market currencies and shares were mostly lower.
Earnings season rolls on with notable highlights including Twitter, UBS and Total. Monetary policy decisions are due in Sweden and Canada. ECB policy makers could on Thursday confirm that asset purchases will end this year, reiterating its pledge to keep interest rates at record lows through summer 2019. President Mario Draghi will hold a press conference. US gross domestic product growth may have slowed in the third quarter, yet remained near its best pace since mid-2015, according to forecasts ahead of Friday’s release.
The S&P 500 dropped 1.4 percent as of 1:09 pm in New York, while the Dow Jones Industrial Average slumped 0.9 percent and the Nasdaq Composite Index eased 2 percent. The Stoxx Europe 600 slipped 0.2 percent, the sixth consecutive decline. The UK’s FTSE 100 gained 0.1 percent, the first increase in three days. Germany’s DAX Index slumped 0.7 percent, the sixth straight drop. The MSCI Emerging Market Index eased 0.7 percent. The MSCI Asia Pacific Index slumped 0.4 percent.