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Stocks try a tentative bounce, bonds fret on U.S. inflation

Asian share markets found a semblance of calm on Monday as S&P futures extended their bounce, though global investors were still fretting about the risks from looming U.S. inflation data after last week's sharp sell-off.

MSCI's broadest index of Asia-Pacific shares outside Japan crept up 1 percent, having suffered a 7.3 percent drubbing last week.

Both South Korea and China gained 1.2 percent, while Japan's Nikkei was closed for a holiday.

E-Mini futures for the S&P 500 rose 0.6 percent, adding to a late bounce on Friday. European bourses were expected to open with solid gains, with futures for the London FTSE already up 1.4 percent.

Yet a relatively sharp 14-tick drop in Treasury bond futures suggested it was too early to sound an all-clear on volatility.

"A massive buildup in market leverage has been partially unwound in the blink of an eye and morphed into something far more broad-based," said Chris Weston, chief market strategist at broker IG.

"One could argue that it is the U.S. bond market that is the driving force, and will remain so through this coming week."

Particularly challenging will be U.S. consumer price data on Wednesday given that it was fears of faster inflation, and thus more aggressive rate rises, that triggered the global rout in the first place.

Median forecasts are for consumer price inflation to slow a little to 1.9 percent in January from a year earlier, mainly due to the base effect of a high reading in January 2017, while the core measure is seen ticking down to 1.7 percent.

A result in line with or below expectations would likely be a big relief, while anything higher could well spook investors, lift bond yields and batter stocks.

Aziz Sunderji, an economist at Barclays (LON:BARC), suspects the inflation scare will prove to be transitory.

"Tight jobs markets will pressure wages upwards, but technology, automation, and globalisation are important – and slow moving – forces acting in the opposite direction," Sunderji argued in a note to clients.

"Paradigms don't shift on a dime. In our view, the recent market turmoil is a bump in the road, not a wholesale change of direction."

THE RETURN OF VOLATILITY

But what a bump it was. The benchmark S&P 500 fell 5.2 percent last week, its biggest decline since January 2016. Ninety-six S&P 500 stocks were down 20 percent or more from their one-year highs, according to Thomson Reuters data.

In Asia, Hong Kong's high-flying shares shed almost 10 percent for the week, while Japan lost 8.1 percent and South Korea 6.4 percent.

The pivotal gauge of S&P 500 volatility, the VIX, remained relatively elevated at 29 percent.

Yields on U.S. 10-year Treasury paper touched a four-year top of 2.885 percent, moving ever further above the S&P 500's dividend yield of 2.34 percent.

The ascent of yields had offered some support to the U.S. dollar last week, but was proving of limited help on Monday as speculators returned to short the currency.

The euro clawed back 0.5 percent to $1.2288, after losing 1.8 percent last week, while the dollar eased 0.4 percent on a basket of currencies to stand at 90.118.

The dollar was steady on the yen at 108.71, aided in part by reports that Haruhiko Kuroda would be re-appointed as head of the Bank of Japan and likely continue the country's ultra-loose monetary policy.

Commodities pared recent losses, with gold 0.6 percent firmer at $1,323.88 an ounce and off a five-week low of $1,306.81.

Brent crude futures rallied 59 cents to $63.38 a barrel, while U.S. crude for April added 68 cents to $59.88.

Brent lost nearly 9 percent last week and U.S. crude dropped 10 percent, the steepest falls since January 2016.

Asia hit by Wall St's tumble, China stock indexes lose 6 percent

Asian shares sank on Friday, with Chinese equities on track for their worst day in two years, as fears of higher U.S. interest rates shredded global investor confidence.

There was limited immediate market reaction to the U.S. government staggering into another shutdown after Congress missed a Thursday midnight deadline to renew funding.

S&P mini futures retained modest gains and were last up 0.4 percent.

Spreadbetters expected Europe markets to start lower, forecasting an 0.8 percent drop for Britain's FTSE, and declines of 0.2 percent for Germany's DAX and France's CAC.

On top of pressure from the drop in global shares, Chinese equities were weighed down as investors sought to stay liquid ahead of the Lunar New Year holidays and pressure was felt to meet rising margin calls. (SS)

The Shanghai Composite Index tumbled 6.0 percent to its lowest since May 2017, and the blue chip CSI300 index dived as 6.1 percent. Both indexes were on track for their largest single-day losses since February 2016.

Frank Benzimra, head of Asia equity strategy at Societe Generale (PA:SOGN) in Hong Kong, said Chinese shares slid mostly because of the U.S. correction but he had some China-specific worries.

He said he now is neutral on China equities "due to two concerns: valuations on China-consumer related industries and execution risks on deleveraging (more specifically financial deleveraging)".

Japan's Nikkei shed 2.9 percent, en route for a weekly loss of 8.6 percent - its biggest since February 2016.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 2.2 percent to a two-month low.

The index, which hit a record high on Jan. 29, was on track for its sixth straight day of losses and stood to fall 7.6 percent on the week.

"The correction phase in equities could last through February and possibly into March," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

"The rise in long-term U.S. yields will have to settle for the correction phase to end. The surge in volatility has also prompted investors to sell risk assets, in turn feeding volatility."

U.S. markets remained the epicenter of the global sell-off, with the Dow plunging 4.1 percent and the S&P 500 sinking 3.7 percent overnight.

With Thursday's losses, both the S&P 500 and the Dow slid into correction territory, falling more than 10 percent from record highs of Jan. 26. (N)

Higher yields are seen hurting equities as they increase borrowing costs for companies and reduce their risk appetite. They also present a fresh alternative to investors who may reallocate some funds to bonds from equities.

The yield on the benchmark 10-year Treasury note rose as high as 2.884 percent on Thursday, just below Monday's four-year high of 2.885 percent. It last stood at 2.8310 percent.

Treasury yields were pushed higher after the Bank of England said British interest rates probably need to rise sooner, adding to expectations of reduced central bank stimulus globally, compounded by U.S. Senate leaders agreeing to a budget deal that would increase government borrowing. [US/]

Treasury yields have been shoved up by the prospect of increased debt issuance to fund fiscal spending under U.S. President Donald Trump, inflation worries, and expectations of the Federal Reserve raising rates sooner and more frequently than was expected.

"An increase in fiscal spending ahead of the U.S. midterm elections has caused the Fed to brace for inflation accelerating and the economy overheating. This led yields higher, ultimately triggering the fall in equities," said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo.

It could be up to new Fed Chair Jerome Powell to restore calm in the financial markets, he said.

In currencies, the dollar edged up 0.2 percent to 108.985 yen , after slipping 0.5 percent overnight. For the week, it was on track to lose 1.5 percent against its Japanese peer amid risk aversion in broader markets.

The Swiss franc dipped 0.2 percent to 0.9383 franc per dollar after advancing about 0.7 percent the previous day.

The euro added 0.1 percent to $1.2259 .

The dollar index against a basket of six major currencies was flat at 90.249 after touching a two-week high of 90.567 overnight.

The pound rose 0.1 percent to $1.3933 . It had reached $1.4067 overnight following the hawkish BoE comments.

U.S. crude futures were down 1.1 percent at $60.53 per barrel after hitting a seven-week trough of $60.27 on Thursday amid fears of rising global supplies after Iran announced plans to increase production and U.S. crude output hit record highs. [O/R]

Brent crude fell 0.7 percent to $64.37 per barrel.

Wall Street plummets; S&P, Dow confirm correction

U.S. stocks plunged around 4 percent on Thursday in another dramatic session, confirming a correction that has thrown the market's nearly nine-year bull run off course.

The bottom of this recent slide remained elusive for investors, who have been whipsawed this week by huge swings that have shaken a market that had only climbed steadily for months.

With Thursday's drops, the benchmark S&P 500 and the Dow industrials confirmed they were in correction territory, both falling more than 10 percent from Jan. 26 record highs. The S&P 500 slumped 3.8 percent on Thursday, while the Dow dropped 4.2 percent as losses accelerated late in the trading day.

The S&P 500 last confirmed a correction in January 2016, when it fell 13.3 percent amid concerns about a slump in oil prices.

The S&P closed below the intraday low it had hit on Tuesday, a key level traders had been watching.

Thursday marked another day of recent sharp swings including the S&P 500's biggest drop in more than six years on Monday that pulled equities away from record highs.

"The dust hasn't settled yet, and I think both buyers and sellers are trying to figure out what this market really wants to do," said Jonathan Corpina, senior managing partner for Meridian Equity Partners in New York.

"I would think that this continues to happen for the next few trading sessions for everything to kind of get flushed out."

The retreat in equities had been long awaited by investors as the market climbed to record high after record high with few bumps. The S&P correction is the fifth of this bull market, according to Yardeni Research. The last bear market was during the 2008 financial crisis.

The sharp selloff in recent days was kicked off by concerns over rising inflation and bond yields, sparked by Friday's January U.S. jobs report, with investors pointing to additional pressure from the violent unwinding of trades linked to bets on volatility staying low.

Since Jan. 26, the S&P 500 has lost $2.49 trillion in market value, according to S&P Dow Jones Indices.

Equities for years have looked relatively attractive compared to the low yields offered by bonds, but the rise in Treasury yields has diminished the allure of stocks, especially with stock valuations at historically expensive levels.

Earlier on Thursday, the 10-year U.S. Treasury note yield (US10YT=RR) rose as high as 2.884 percent, nearing Monday's four-year peak of 2.885 percent, after the Bank of England said interest rates probably needed to rise sooner than previously expected.

"What we're seeing today is continued concerns around interest rates going higher, around valuations in the stock market," said Chris Zaccarelli, chief investment officer with Independent Advisor Alliance in Charlotte, North Carolina.

The Dow Jones Industrial Average (DJI) fell 1,032.89 points, or 4.15 percent, to 23,860.46, the S&P 500 (SPX) lost 100.66 points, or 3.75 percent, to 2,581 and the Nasdaq Composite (IXIC) dropped 274.83 points, or 3.9 percent, to 6,777.16.

All 11 major S&P sectors finished lower, with financials (SPSY) and technology (SPLRCT) the worst-performing groups. All 30 components of the blue-chip Dow finished negative.

Amazon (O:AMZN) and Facebook (O:FB), two of the big stocks that had led the S&P's rally over the past year, were among the biggest drags on Thursday.

After regular cash trading, S&P 500 e-mini futures edged down 0.2 percent late on Thursday.

Thursday's slide put the S&P 500 back into negative territory for the year, down 3.5 percent.

Investors are weighing whether the sharp swings are the start of a deeper correction or just a temporary bump in the prolonged bull market.

A new survey by the American Association of Individual Investors showed the percentage of U.S. individual investors expecting a decline in stock prices has hit a three-month high.

Volatility remained high compared to recent months. The market's main gauge of volatility, the Cboe Volatility Index (VIX), rose 5.73 to 33.46 on Thursday, about three times the average level of the past year.

Equity options trading volume, already elevated this week, is likely to pick up as February contracts approach expiration next week, said Jon Cherry, head of U.S. options at Northern Trust (NASDAQ:NTRS) Capital Markets in Chicago.

"A lot of people have been forced to put on positions that will need to be either wound down or rolled forward," Cherry said.

Thursday marked another session this week with strong volume. About 10.6 billion shares changed hands in U.S. exchanges, well above the 8.2 billion daily average over the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by an 8.26-to-1 ratio; on Nasdaq, a 5.58-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 32 new lows; the Nasdaq Composite recorded 24 new highs and 113 new lows.

U.S. Oil Prices Turn Lower After Domestic Output Tops 10M Barrels Per Day

Crude prices turned lower on Wednesday after coming under renewed selling pressure in the wake of data showing U.S. oil production topped the 10 million barrels per day (bpd) mark last week.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil production rose 3.3% to an all-time high of 10.25 million bpd, close to the output of top producers Russia and Saudi Arabia.

The report also showed that crude oil inventories rose by 1.9 million barrels in the week ended Feb. 2. That compared with analysts' expectations for a gain of 3.1 million barrels, while the American Petroleum Institute late Tuesday reported a supply-drop of 1.1 million barrels.

Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 711,000 barrels last week, the EIA said.

Total U.S. crude oil inventories stood at 420.3 million barrels as of last week, which the EIA considered to be in the middle of the average range for this time of year.

Meanwhile, gasoline inventories increased by 3.4 million barrels, compared to expectations for a gain of 0.4 million barrels. For distillate inventories including diesel, the EIA reported a gain of 3.9 million barrels.

U.S. West Texas Intermediate (WTI) crude futures lost 62 cents, or 1%, to $62.77 a barrel by 10:35AM ET (1535GMT). Prices were at around $63.69 prior to the release of the inventory data.

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., dipped 27 cents, or roughly 0.4%, to $66.60 a barrel.

Oil settled lower for the third session in a row on Tuesday weighed down by the recent stock-market rout and as traders weighed a steady increase in U.S. output against OPEC's ongoing efforts to drain the market of excess supplies.

In other energy trading, gasoline futures slipped 1.2% to $1.799 a gallon, while heating oil was down 0.9% at $1.966 a gallon.

Natural gas futures sank 2.1%, to $2.697 per million British thermal units.

Global shares fragile, U.S. yields creep up after U.S. budget deal

Global share markets remained shaky on Thursday as U.S. bond yields crept up towards four-year highs after U.S. congressional leaders reached a two-year budget deal to raise government spending by almost $300 billion.

While the deal was a rare display of bipartisanship that should stave off a government shutdown, it looks set to widen the U.S. federal deficit further, and could fan inflation worries and prompt the Fed to raise interest rates faster.

European shares are expected to decline, with Germany's Dax futures falling 0.5 percent, and France's Cac futures and Britain's FTSE futures shedding 0.7 percent.

"The scale of increase in spending was much larger than what markets were expecting just a few months ago. It will have as big impacts as tax cuts. Since the markets haven't priced this in yet, U.S. bonds could be sold for another week or so," said Tomoaki Shishido, fixed income analyst at Nomura Securities.

Combined with an expected economic boost from President Donald Trump's planned tax cuts, the increased deficit spending could overheat already strong U.S. growth and accelerate inflation to levels not seen over a decade.

Such fears drove the 10-year U.S. Treasuries yield back up to 2.840 percent, near Monday's four-year peak of 2.885 percent.

The Senate and the House were both expected to vote on the proposed deal on Thursday, amid some opposition on both sides of the aisle.

MSCI's broadest index of Asia-Pacific shares outside Japan ticked up 0.3 percent, led by gains in India, though it remained not far off its six-week low touched on Tuesday.

Japan's Nikkei rose 1.1 percent, though it was still down almost six percent so far this week.

Investors remained on edge after a big selloff in equities in the past few days on worries about the prospects of rising interest rates around the world, which would shut off the liquidity spigot that has underpinned an exuberant rally in riskier asset.

Indeed, San Francisco Federal Reserve Bank President John Williams said on Wednesday the Fed will stick to its plan for "steady, gradual" interest-rate increases.

U.S. stocks ran out of steam on Wednesday after an early surge, with the S&P 500ending down 0.50 percent and the Nasdaq Composite losing 0.9 percent.

The Cboe Volatility Index, known as the VIX and often seen as investors' fear gauge, fell 2.3 points to 27.73, but that was still more than twice the levels generally seen in the past few months.

Andrew Milligan, Head of Global Strategy at Aberdeen Standard Investments, said in a note it was not a surprise to see a market correction after a long period of low volatility.

"This (low volatility) was aided by central bank QE policies continuing to inject sizeable amounts of liquidity into a wide range of financial assets, as well as the steady state of the global economy continuing to reassure investors," he said.

"All in all, the probability of a correction has increased over time, which creates a good opportunity for active investors, as long as long-term drivers remain positive."

China's trade data showed the country's exports and imports beat market expectations in January, rising 11.1 percent and 36.9 percent from a year earlier respectively, underscoring the strength of the global economy.

The dollar was supported after the budget deal in Washington, rising against a broad range of currencies.

The dollar index rose to a two-week high of 90.403 on Wednesday and last stood at 90.251.

The euro dipped to $1.2276, staying near its lowest level in two weeks.

Southern European government bond yields tumbled on Wednesday, after Germany's pro-European, pro-spending Social Democratic party took the finance ministry in a coalition government.

The dollar stood at 109.35 yen, recovering from Wednesday's low of 108.92.

The New Zealand dollar fell to four-week lows after New Zealand's central bank lowered its forecasts for inflation right out to 2020 while saying volatility in equity markets this week was a warning sign that global investors are nervous about the risk of higher inflation and rising interest rates.

The kiwi fell to $0.7190, a low last seen on Jan. 11.

The British pound fetched $1.3903, not far from Tuesday's two-week low of $1.3838, ahead of the Bank of England's Monetary Policy Committee meeting later in the day.

The Chinese yuan, which posted its biggest monthly gain ever last month, also stepped back 0.5 percent to 6.3205 yuan per dollar.

Precious metals also dipped, with gold hitting a four-week low of $1,309.9.

Oil prices fell after U.S. data showed a build in inventories and record high crude production, raising worries of more selling.

Brent crude futures tumbled to a six-week low of $65.12 per barrel. It last traded at $65.42, down 0.1 percent.

U.S. crude futures hit one-month low of $61.25 per barrel and last traded at $61.65, down 0.3 percent in Asia.

Bitcoin rebounds from three-month low in volatile trade

Bitcoin recovered from three-month lows below $6,000 in choppy trading on Tuesday, but worries lingered about a global regulatory clampdown and moves by banks to ban buying bitcoin with credit cards.

Investors swooped in after a steep fall. On the Luxembourg-based Bitstamp exchange, bitcoin hit $5,920, its lowest since mid-November, before recovering to above $7,000 (BTC=BTSP). It was last at $7,260 in late morning trading in New York, up roughly 6 percent on the day.

"The recent weakness in bitcoin stems from tightening liquidity and near-term profit taking, and does not reflect a change in the long-term outlook for the digital currency," said John Sarson, managing partner at Blockchain Momentum LP and ETF Momentum Investing in Indianapolis.

"We view this selloff positively as we believe that lower prices will entice institutions to act quickly to adopt enhanced digital asset services before prices recover."

Bitcoin has slumped in recent sessions as a risk-off mood spread across financial markets. It has fallen about 70 percent from its peak of almost $20,000 in December and was down nearly 50 percent so far this year.

The original cryptocurrency gained more than 1,300 percent last year.

Other digital currencies also rose after posting steep losses the last few weeks. Ethereum, the second-largest by market value, was up 1.8 percent over the past 24 hours at $751.48, while the third-largest, Ripple, edged up 0.5 percent at 73 U.S. cents, according to cyrptocurrency tracker coinmarketcap.com.

The gains came amid a U.S. Senate hearing on virtual currencies in which J. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission (CFTC) and Jay Clayton, chairman at the Securities and Exchange Commission (SEC) have been testifying. The Senate is examining the role of the SEC and CFTC in regulating virtual currencies.

Clayton in testimony on Tuesday said Congress may need to change financial laws to better regulate cryptocurrencies.

After a massive run-up last year, in which investors across the world piled into the market, cryptocurrency prices have skidded lower while regulators have stepped up warnings about the risk of investing in them.

Regulatory clampdowns in South Korea and India and an advertising ban byFacebook Inc (O:FB) have hit sentiment. Several banks said in recent days that they were banning customers from buying cryptocurrencies with credit cards.

Still, many cryptocurrency backers said regulation should be welcomed and short-term price volatility is to be expected for a new market.

Iqbal Gandham, managing director at trading platform eToro said his company had seen a drop in trading interest from investors in recent weeks amid the selloff, but that interest remained far higher than before the fourth quarter of last year.

The plunge has come during a heavy selloff in global stock markets in recent days, undermining views that bitcoin's price moves are generally uncorrelated to those of other asset classes.

Asian shares on edge as U.S. futures slip

Asian shares reversed their earlier gains on Wednesday as investors dumped U.S. stock futures for safer harbors, a sign market participants remain jittery after this week's global markets rout.

While most analysts believed this week's distressed selling looks to have run its course for the moment, allowing volatility to abate a little, the prospect of monetary tightening across the globe remains a challenge for the long term.

"If we look at some of the drivers of the recent volatility – the natural correction and the bond sell-off – we don't foresee any of these factors contributing to a lengthy period of extreme volatility," said Tom Kenny, senior economist at ANZ.

"The correction is probably a healthy development and is not reflective of a souring of the macroeconomic outlook."

Investors took their cues from a late rebound on Wall Street overnight, though many had an anxious eye on E-Mini futures for the S&P 500 which slipped about 1 percent in late Asian trading. Dow Minis were down 0.9 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was a tad softer, having risen as much as 2 percent in early trade.

Japan's Nikkei eased too but was still up 0.2 percent. Chinese blue chips and South Korea's KOSPI index dropped more than 2 percent.

Hong Kong, Singapore and Indian stock markets were also in the red.

"The only surprise about the current volatility is that it hasn't happened sooner. Normally, even in a bull market, investors should expect a sell-off of 10-percent-plus at some point," said Richard Titherington, chief investment officer of EM Asia Pacific Equities at J.P. Morgan Asset Management.

"While a major market downturn is possible, it is not our current expectation. The underlying backdrop of an improving global economy, a weakening U.S. dollar and a pickup in global earnings all remain supportive factors."

Bonds had started to see some buying again, a hint that risk appetite might be waning, which could trigger another spasm of stock selling.

U.S. 10-year yields nudged lower to 2.76 percent, after going as high as 2.80 percent earlier in the day.

BLAME THE ALGOS

It was a steep spike in yields last Friday that sparked the initial rout on Wall Street, forcing sales by a host of highly leveraged funds, which ramped up volatility and drove yet more selling.

Many of these were algorithmic funds crowded into similar trades - long stocks and short volatility. The selling then cascaded through their computer systems in a way almost beyond human intervention.

The pivotal gauge of S&P 500 volatility, the VIX, did come off almost 20 points overnight but was still relatively elevated at 29.98 percent.

"Short volatility funds were caught by the spike in the VIX and had to cover," said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.

"You're a genius until you're not and when it takes just a day or two to unwind your whole strategy then you were never a genius," he added. "But volatility does cluster, so there is no guarantee that markets are out of the woods yet."

In currencies, investors found safe harbor in the Japanese yen while riskier plays such as the Australian and New Zealand dollars declined.

The U.S. dollar fell 0.3 percent to 109.23 yen, still above Tuesday's trough of 108.43.

The euro was a touch firmer at $1.2390, while the dollar was barely changed against a basket of currencies to 89.556.

Gold, another supposed safe haven, advanced 0.4 percent to $1,330.22 an ounce after touching a three-week low at $1,319.96.

Oil prices were strong too, with U.S. crude for April adding 51 cents to $63.89. Brent crude futures gained 59 cents to $67.45 a barrel.

Wall Street plunges, S&P 500 erases 2018's gains

U.S. stocks plunged in highly volatile trading on Monday, with both the S&P 500 and Dow Industrials indices slumping more than 4.0 percent, as the Dow notched its biggest intraday decline in history with a nearly 1,600-point drop and Wall Street erased its gains for the year.

The declines for the benchmark S&P 500 index and the Dow Jones Industrial Average were the biggest single-day percentage drops since August 2011, a period of stock-market volatility marked by the downgrade of the United States' credit rating and the euro zone debt crisis.

The question now for investors, who have ridden a nearly nine-year bull run, is whether this is the long-awaited pullback that paves the way for stocks to again keep rising after finding some value, or the start of a decline that leads to a bear market.

"A lot of people who have been in this market for the past three or four years have never seen this before,” said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas. “The psychology of the market changed today. It’ll take a while to get that psychology back.”

After regular trading hours on Monday, S&P 500 E-mini stock futures rose 0.73 percent, suggesting some traders expect Wall Street to open with a gain on Tuesday.

Bulls argue that strong U.S. corporate earnings, including a boost from the Trump administration's tax cuts, will ultimately support market valuations. Bears, including short sellers that bet on the market decline, say that the market is over-stretched in the context of rising bond yields as central banks withdraw their easy money policies of recent years.

The U.S. stock market has climbed to record peaks since President Donald Trump's election, on the prospect of tax cuts, corporate deregulation and infrastructure spending, and it remains up 23.8 percent since his victory. Trump has frequently taken credit for the rise of the stock market during his presidency, though the rally and economic recovery was well underway during the Obama administration.

As the stock market fell on Monday, the White House said the fundamentals of the U.S. economy are strong. U.S. economic growth was running at a 2.6 annualized rate in the fourth quarter last year and the unemployment rate is at a 17-year low of 4.1 percent.

On Monday, the financial, healthcare and industrial sectors fell the most, but declines were spread broadly as all major 11 S&P sectors dropped at least 1.7 percent. All 30 of the blue-chip Dow industrial components finished negative.

With Monday's declines, the S&P 500 erased its gains for 2018 and is now down 0.9 percent in 2018. The Dow is down 1.5 percent for the year.

The market's pullback comes amid concerns about rising bond yields and higher inflation which were reinforced by Friday's January U.S. jobs report that prompted worries the Federal Reserve will raise rates at a faster pace than expected this year.

"The market has had an incredible run," said Michael O’Rourke, chief market strategist At JonesTrading In Greenwich, Connecticut.

"We have an environment where interest rates are rising. We have a stronger economy so the Fed should continue to tighten ... You're seeing real changes occur and different investments are adjusting to that," O'Rourke said.

The Dow Jones Industrial Average fell 1,175.21 points, or 4.6 percent, to 24,345.75, the S&P 500 lost 113.19 points, or 4.10 percent, to 2,648.94 and the Nasdaq Composite dropped 273.42 points, or 3.78 percent, to 6,967.53.

On Monday, the S&P 500 ended 7.8 percent down from its record high on Jan. 26, with the Dow down 8.5 percent over that time. The declines come after the Dow and S&P posted their biggest weekly percentage drops since January 2016 last week, and the Nasdaq posted its biggest weekly drop since February 2016.

At one point, the Dow fell 6.3 percent or 1,597 points, the biggest one-day points loss ever. Even with the sharp declines, stocks finished above their lows touched during the session.

"It doesn’t look like people are working their orders – the programs are trading this," Dan Ryan, who works on the New York Stock Exchange floor for E&J Securities, said as he was leaving work for the day.

Investors also unloaded riskier corporate bonds during the Wall Street stock market rout. Exchange-traded funds that focus on junk bonds suffered a third day of losses. BlackRock’s iShares iBoxx High Yield Corporate Bond ETF, which has about $16 billion in assets, fell 0.6 percent to its lowest share price since December 2016.

The CBOE Volatility index, the closely followed measure of expected near-term stock market volatility, jumped 20 points to 30.71, its highest level since August 2015.

“One thing is that going into the last week or so, investor bullishness was in the top decile of its historical range, which suggests that investors were pretty optimistic, with high expectations and largely complacent," said Jack Ablin, chief investment officer with Cresset Wealth Advisors in Chicago. "There’s kind of an emotional reversal that’s going on.”

About 11.5 billion shares changed hands in U.S. exchanges on Monday, well above the 7.6 billion daily average over the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by a 8.64-to-1 ratio; on Nasdaq, a 6.92-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week highs and 38 new lows; the Nasdaq Composite recorded 17 new highs and 164 new lows.

Stock Sell-Off Rolls On; U.S. Futures Pare Decline: Markets Wrap

Asian stocks plunged for a second day as investors continued to flee riskier assets, though U.S. equity futures attempted a comeback as European trading began.

The Nikkei 225 Stock Average closed off its intraday lows, still weak enough to record a drop of more than 10 percent from a high on Jan. 23. Stocks across the region extended a global slump with virtually all shares on the 1,000-plus member MSCI Asia Pacific Index down. Euro Stoxx 50 futures fell more than 3 percent. The yen was flat after advancing earlier on haven demand. Treasuries declined after they also benefited from a flight to safety earlier.

See our blog on the current sell-off here, and for our broader blog on markets, click here.

“How far it goes down? You tell me,” Steven Wieting, global chief investment strategist at Citigroup Inc (NYSE:C)., told Bloomberg TV. “But this speed of decline you cannot keep doing this day after day after day without finding some sort of bottom rather quickly,” he said -- though anticipating that markets will stay volatile for a while.

Elsewhere, oil slumped for a third day and metals joined the sell-off after gaining on Monday. Bitcoin tumbled for a sixth day to trade around $6,000.

For more on the slide in stocks, see:
Traders Aren’t Panicking Despite Massive Late-Session Stock Rout
Bad Day Turns Terrifying as Dow Suffers Worst Point Plunge Ever
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Many finance professionals were left scratching their heads to explain the severity of the moves in a short space of time. Anxiety was building about the outlook for monetary policy prior to Monday’s rout, with equities being tested by the surge in bond yields. Global shares had just last month risen to record highs on optimism for expanding profits and economic growth.

Even as the Dow suffered its worst point loss ever, some of the biggest investors remained relatively sanguine. Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, said the big declines were “just minor corrections in the scope of things” and there was a lot of cash on the sidelines waiting to buy. Jurrien Timmer, director of global macro at Fidelity Investments, said he doesn’t expect the stock market to drop more than 10 percent.

“I actually think there’s buying opportunities, maybe not today, but through this week as this sell-off exacerbates,” said Sean Fenton, a portfolio manager who oversees about A$1 billion ($788 million) at Tribeca Investment Partners in Sydney.

Here are some key events scheduled for this week:

  • The Reserve Bank of Australia left rates unchanged for a record 16th meeting Tuesday.
  • Monetary policy decisions are also due in Russia, India, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru and the Philippines.
  • Earnings season continues with reports from General Motors (NYSE:GM), Walt Disney, SoftBank, Sanofi (PA:SASY), Philip Morris, Total, Tesla (NASDAQ:TSLA),Rio Tinto (LON:RIO), L’Oreal and Twitter.
  • Dallas Fed President Robert Kaplan and New York Fed President William Dudley are among policy officials due to speak in Frankfurt and New York.

These are the main moves in markets:

Stocks

  • Euro Stoxx 50 futures fell 3.2 percent in early European trading. Futures on the S&P 500 Index declined 0.1 percent after falling as much as 3 percent. The underlying gauge tumbled 4.1 percent Monday.
  • Japan’s Topix index plunged 4.4 percent at the close in Tokyo, its biggest drop since November 2016, and the Nikkei 225 dropped 4.7 percent, paring a slump of as much as 7.1 percent.
  • Hong Kong’s Hang Seng Index declined 4.6 percent and the Shanghai Composite Index fell 3.4 percent.
  • South Korea’s Kospi index lost 1.5 percent.
  • The MSCI Asia Pacific Index plunged 3.4 percent, set for its biggest drop since June 2016, when stocks were hit by the Brexit vote.

Currencies

  • The Bloomberg Dollar Spot Index gained less than 0.1 percent.
  • The yen was flat at 109.09 per dollar after rising 1 percent on Monday.
  • The euro rose 0.2 percent to $1.2397.
  • The pound was steady at $1.3966.

Bonds

  • The yield on 10-year Treasuries rose about four basis points to 2.74 percent after plunging more than 13 basis points Monday.
  • German 10-year bund yields fell about three basis points to 0.71 percent.

Commodities

  • West Texas Intermediate crude was down 0.9 percent to $63.56 a barrel.
  • Gold rose 0.2 percent to $1,342.79 an ounce.

U.S. stock futures open weaker; Treasury futures up on Sunday

U.S. stock futures opened weaker on Sunday, extending the rout equity markets experienced on Friday when the benchmark S&P 500 and Dow Jones Industrial average notched their worst week since early January 2016.

Rising bond yields and prospects for increasing inflation undermined equities and pushed benchmark 10-year U.S. Treasury yields to a four-year high on Friday.

S&P 500 e-minis (ESc1) traded down roughly 24 points before pulling back some ground to trade down 16 points after the first hour of trade, a loss of 0.60 percent.

Dow e-minis (1YMc1) were down 190 points, or 0.75 percent.

U.S. Treasury futures prices rose at the open but have since retreated and traded flat .

While the early indication is for weakness in the U.S. markets when regular trading resumes on Monday, it is how the day ends rather than begins, that will be the focus for investors, one strategist said.

"The futures opening lower portends this is a market that might need more of a sell-off, but we have got Asian and European trading hours to get through and futures can change quite markedly through the night," said Quincy Krosby, chief market strategist at Prudential Financial (NYSE:PRU) in Newark, New Jersey.

"Overall you still have earnings coming out and they have been solid for the most part. It was a market that was poised to pullback at some point. It was overbought. This was a widely anticipated pullback, and nothing to be surprised by. The question is how much more does it have to pull back?" she said.

On Friday, the Dow Jones Industrial Average (DJI) fell 665.75 points, or 2.54 percent, to 25,520.96, the S&P 500 (SPX) lost 59.85 points, or 2.12 percent, to 2,762.13 and the Nasdaq Composite (IXIC) dropped 144.92 points, or 1.96 percent, to 7,240.95.

The yield on the benchmark 10-year Treasury (US10YT=RR) reached a four-year peak at 2.852 percent on Friday after a strong U.S. jobs report raised concerns the U.S. Federal Reserve might hasten to increase interest rates to stem inflation.

The U.S. dollar traded mixed in narrow ranges, with modest losses against the euro but slight gains against the yen in early Asian trade for the new week. [FRX/][.N]

"I think fundamentally, there seems to be some uncertainty emerging with regard to the change in the Fed and until investors get a better handle on what (Jerome) Powell is like... that may keep investors on the sidelines," Bucky Hellwig, senior vice president at BB&T (NYSE:BBT) Wealth Management in Birmingham, Alabama, said, referring to the incoming Fed Chair.