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Stock Gains Fade; Oil Rallies, Treasuries Advance: Markets Wrap

U.S. stocks struggled to rebound from the worst December rout since the Depression, as weakness in health-care providers offset a rally in some big-cap tech shares. Oil rallied as Saudi Arabia cut exports.

The S&P 500 Index’s gain faded in the final hour of trading, putting the measure on track for a close near 2,500. The Dow Jones Industrial Average lost more than 100 points, while the Nasdaq indexes advanced. A report that Saudi Arabia lowered oil exports fueled a surge in the price of crude. Equities started the day lower on poor sentiment sparked by a weak reading on Chinese manufacturing, which added to concern that global growth is slowing.

The 10-year Treasury yield held near 2.65 percent, the lowest in 11 months, while similar-maturity German bunds remained on a tear. The yen was higher versus the dollar, which gained against most of its other major peers.

“The overall theme that’s been driving the market down is concerns about future economic growth and future earnings growth,” Peter Jankovskis, co-chief investment officer at Oakbrook Investments, said by phone. “The concern is that the tariff action, while it hasn’t had a significant impact to date here in the U.S., is going to start weighing on things. And when we get these economic reports from overseas, principally from China, that provides some evidence that, yeah, it is starting to bite, and that makes people nervous.”

The risk-off tone that gripped markets in December eased a bit at the start 2019, with the threat of rising rates, an escalating trade war and slowing growth still looming. While President Donald Trump made positive noises about reaching a trade deal with his counterpart Xi Jinping over the weekend, the Chinese data are a stark example to investors that the protectionist showdown is starting to have an impact on economic activity.

“The trend remains lower for now,” Kyle Rodda, an analyst at IG Group Holdings Plc, told Bloomberg Television. “We’ve had rate hikes from the Fed effectively priced out, so we are looking at a situation when markets are thinking that we are entering a period of slower growth.

Elsewhere, the dollar rose as the euro and pound slid — the latter falling even as U.K. manufacturing growth unexpectedly improved. Emerging-market equities slumped.

Here are some events investors may focus on in coming days:

– The U.S. December jobs report is due Friday.
– Fed Chair Powell is interviewed with predecessors Janet Yellen and Ben Bernanke at the annual meeting of the American Economic Association Friday. Atlanta Fed President Raphael Bostic joins a panel on long-run macroeconomic performance.
And these are the main moves in markets Wednesday:

Stocks
– The S&P 500 fell 0.1 percent as of 3:07 p.m. in New York.
– The Stoxx Europe 600 Index decreased 0.1 percent.
– The MSCI Asia Pacific Index declined 1 percent, hitting the lowest in a week with the first retreat in more than a week.
– The MSCI Emerging Market Index sank 1.4 percent, reaching the lowest in two months.

Currencies
– The Bloomberg Dollar Spot Index climbed 0.4 percent, the first advance in a week and the largest increase in more than a week.
– The euro sank 1.1 percent to $1.1343.
– The British pound sank 1 percent to $1.2611, the weakest in two weeks on the largest decrease in more than three weeks.
– The Japanese yen gained 0.6 percent to 109.123 per dollar, the strongest in seven months on the biggest rise in more than a week.

Bonds
– The yield on 10-year Treasuries fell three basis points to 2.66 percent, its fifth straight decline.
– The two-year yield rose one basis point to 2.50 percent
– Germany’s 10-year yield sank nine basis points to 0.15 percent, the lowest in more than two years on the biggest tumble in more than two years.

Commodities
– West Texas Intermediate crude rose 2.5 percent to $46.55 a barrel.
– Gold futures rose 0.2 percent to $1,283.50 an ounce, reaching the highest in almost seven months on its fifth consecutive advance.

Bloomberg

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