The selloff in U.S. assets picked up steam as strong jobs data increased the likelihood the Federal Reserve will lift rates next month. Equities headed for the worst week in two years and Treasurys tumbled to a four-year low.
The S&P 500 Index’s slump in the five days surpassed 2.5 percent after the 10-year Treasury yield popped above 2.85 percent for the first time since January 2014. Bloomberg’s dollar index surged to erase a weekly loss. The Nasdaq 100 Index slipped, even as Amazon.com Inc. rallied to a record on earnings. Apple Inc. lost 1.2 percent amid a disappointing sales forecast, while Alphabet Inc. sank more than 5 percent as earnings missed.
U.S. hiring picked up in January and wages rose at the fastest annual pace since the recession ended, as the economy’s steady move toward full employment extended into 2018. Equities are being tested by the surge in bond yields, with some fund managers saying 3 percent U.S. 10-year rates would signal a bond bear market. The level is seen by many stock-watchers as a potential trigger for a correction in equities.
In Europe, a bond selloff deepened across the continent, and equities dropped for a fifth straight day, the longest streak since November. Disappointing results from companies including Deutsche Bank AG and BT Group Plc. paced losses, with Germany’s DAX giving up the year’s gains, capping the worst weekly decline since 2016. Bund yields reached a fresh two-year high, while the euro and British pound weakened. Japanese debt gained and the yen declined after the Bank of Japan intervened to stem the rise in rates.
“People are finally starting to reprice reflation, it’s about time,” Jeanne Asseraf-Bitton, head of global cross-asset research at Lyxor Asset Management, said by phone. “Global economic growth is strong and corporate earnings are very solid, so there’s no reason to question the equity bull market. The rise in bond yields is good, it’s just the speed at which it’s happening that is making investors nervous. Bottom line: this is a healthy correction.”
Elsewhere, oil edged lower, though still trading near its highest level since 2015 in New York. Bitcoin continued to slide after a miserable January, falling below $8,000.
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Stocks
The S&P 500 Index fell 0.9 percent at 10:15 a.m. in New York. The Nasdaq 100 Index fell 1 percent. The Stoxx Europe 600 Index decreased 1 percent, hitting the lowest in a month with its fifth consecutive decline. Germany’s DAX Index dipped 1.3 percent, hitting the lowest in more than four months with its fifth straight decline. The MSCI Asia Pacific Index fell 0.7 percent. Topix index fell 0.3 percent, Hong Kong’s Hang Seng Index dropped 0.1 percent, the Kospi index declined 1.7 percent, Australia’s S&P/ASX 200 Index rose 0.5 percent.