Stocks Extend Drop After Worst Slump Since October: Markets Wrap

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(Bloomberg) — Global stocks extended a retreat from last week’s all-time high as disappointing earnings from tech giants added to concerns about valuations. The dollar extended its advance.

Nasdaq 100 futures underperformed as results from the likes of Apple Inc. and Tesla Inc. sent shares sliding after market, while stocks in Hong Kong and Australia saw the bulk of losses in Asia. Earlier, the S&P 500 slumped 2.6% — the most since October — after Federal Reserve officials left their main interest rate unchanged and made clear the central bank was nowhere near exiting massive support for the economy. Treasuries steadied, with 10-year yields trading just over 1%.

Turmoil continued in pockets of the market where retail traders are becoming a dominant force. Shares of GameStop Corp. and AMC Entertainment Holdings Inc. tumbled post-market, paring Wednesday’s surge. The WallStreetBets Reddit forum, which has fueled the frenzy of retail trading, was briefly made private earlier by moderators.

A push higher for stocks has reversed this week as investors looked to a spate of earnings releases for clues about corporate health. Fed Chairman Jerome Powell said at a press conference that the U.S. economy was a long way from full recovery and still short of policy makers’ inflation and job goals.

“Markets were vulnerable to a setback given some of the positioning and sentiment data that we monitor but we still believe we’re going into a strong economic and profit recovery,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs Group Inc., said on Bloomberg TV. “That’s going to drive markets higher from this setback.”

Apple shares fell after a cautious outlook from executives. Tesla reported lower-than-expected profit and record revenue, mixed results that disappointed investors. Facebook warned of “significant uncertainty” in 2021.

On the virus front, officials in the U.K. announced new rules to try to curb the spread of Covid-19 and Germany cut its 2021 economic growth forecast. The European Union failed to resolve its dispute with AstraZeneca Plc over vaccine supplies, raising the risk of additional delays to the bloc’s sluggish inoculation campaign

Elsewhere, Bitcoin fell below $30,000 before paring the decline. The euro held losses in the wake of comments from a European Central Bank official who said that markets are underestimating the odds of a rate cut.

These are some key events coming up in the week ahead:

Fourth-quarter GDP, initial jobless claims and new home sales are among U.S. data releases Thursday.U.S. personal income, spending and pending home sales come Friday.

These are the main moves in markets:

Stocks

S&P 500 futures were little changed as of 10:46 a.m. in Tokyo. The gauge fell 2.6% on Wednesday.Japan’s Topix index declined 1%.Hong Kong’s Hang Seng declined 0.9%. South Korea’s Kospi dropped 0.9%.Australia’s S&P/ASX 200 Index sank 2.3%.Euro Stoxx 50 futures were 0.3% lower.

Currencies

The Bloomberg Dollar Spot Index rose 0.1%.The euro dropped 0.1% to $1.2094.The yen slid 0.2% to 104.30 per dollar.The offshore yuan was at 6.5058 per dollar, down 0.2%.

Bonds

The yield on 10-year Treasuries was at 1.02%.Australia’s 10-year yield was at about 1.09%.

Commodities

West Texas Intermediate crude slipped 0.5% to $52.57 per barrel.Gold slipped 0.4% to $1,837.58 an ounce.

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