S&P 500 Enters Correction as Treasuries Rise – US Market Wrap
Volatility soared again across US asset classes, extending a risk-averse retreat that knocked the S&P 500 below the 10% correction mark and indicated a shift towards high-yield bonds. New salvos in Trump’s trade war sparked another dash for havens in the Treasury market, amid growing concerns that the economy’s expansion is under threat.
The benchmark measure for US equities, which was at a record in mid-February, has lost $5 trln since then, plunging to a six-month low. A decline in the market’s most prominent category, megacaps, worsened the movements.
Speculative areas, such as unproductive technology and the most shorted stocks, were hammered. An $8 billion exchange-traded fund tracking junk bonds saw one of its biggest losses of the year, bucking the rise in Treasuries.
In another indicator of a trade war escalation, Trump threatened to impose a 200% tariff on European wine, champagne, and other alcoholic beverages.
Later Thursday, Trump said he would not rescind steel and aluminium tariffs that went into force this week, nor would he back down from plans for broad reciprocal penalties on global trading partners, which are slated to begin as early as April 2nd.
The S&P 500 index lost 1.4%. The Nasdaq 100 declined 1.9%. The Dow Jones Industrial Average fell 1.3%. A barometer of technology megacaps fell 2.5%. Adobe fell on a dismal outlook, while Intel rose after choosing an industry veteran as its new CEO.
The yield on 10-Yr Treasuries declined five basis points to 4.26 percent. A $22 billion US issuance of 30-Yr bonds was disappointing. The dollar gained 0.1%.
