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Stocks Plunge to Cap Worst Week Since March: Markets Wrap

Vildana Hajric and Sarah Ponczek
Stocks Plunge to Cap Worst Week Since March: Markets Wrap

(Bloomberg) -- U.S. stocks plunged, capping the worst week for the S&P 500 Index since March, as the Trump administration pressed its trade war with China and the latest batch of economic data added to concern that growth has peaked. Oil rose after OPEC agreed to cut output.

The Dow Jones Industrial Average shed over 500 points Friday, bringing its decline in the abbreviated trading week to over 1,000. The S&P finished the week down 4.6 percent. The trade outlook appeared to take a negative turn after Huawei Technologies’s chief financial officer was charged with conspiracy and the U.S. alleged the company violated sanctions. The Federal Reserve’s Lael Brainard struck a hawkish tone in comments at a conference.

“What we think is going on is a repricing of growth,” said Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co. “The bond market is essentially saying we don’t see the kind of growth that we’ve had. So what the market is doing is repricing stocks, particularly those that have performed extraordinarily well, to a lower growth rate.”

Stocks had opened higher after the November jobs report showed moderation in the labor market, giving succor to proponents for a slower pace of Fed interest-rate increases. Treasuries fluctuated on the data before settling higher as risk aversion increased. The dollar fell.

U.S. payrolls and wages rose by less than forecast in November while the unemployment rate held at the lowest in almost five decades. The report comes with financial markets on edge over whether Fed Chair Jerome Powell is closer to pausing. Market-implied U.S. rate expectations have been sinking amid the tumult in equities, but hawkish views still exist among Fed officials, including Powell and Brainard.

In Europe, stocks rebounded from the worst day in more than two years, while Asian shares posted modest gains as investors sought to end a bruising week on a more upbeat note. The pound edged lower even after U.K. Prime Minister Theresa May was said to be weighing a plan to postpone the vote on her Brexit deal.

Oil rallied after OPEC broke an impasse over production curbs, agreeing on a larger-than-expected cut with allies after two days of fractious negotiations in Vienna. The cartel and its partners agreed to remove 1.2 million barrels a day from the market, with OPEC itself shouldering 800,000 barrels of the burden. Cryptocurrencies continued their slide with a fresh bout of losses after U.S. regulators dashed hopes that a Bitcoin exchange-traded fund would appear before the end of this year.

These are the main moves in markets:

Stocks

The S&P 500 fell 2.3 percent to 2,633.08 as of 4:06 p.m. in New York, while the Dow Jones Industrial Average slumped 2.2 percent to 24,388.95 and the Nasdaq Composite Index tumbled 3.1 percent to 6,969.25.The Stoxx Europe 600 rose 0.6 percent, the first increase in four days. The U.K.’s FTSE 100 rallied 1.1 percent.Germany’s DAX Index gained less than 0.1 percent.The MSCI Emerging Market Index fell less than 0.1 percent.The MSCI Asia Pacific Index increased 0.1 percent.

Currencies

The Bloomberg Dollar Spot Index fell 0.1 percent. The euro gained 0.3 percent to $1.1408.The British pound weakened 0.3 percent to $1.2742.The Japanese yen gained less than 0.1 percent to 112.66 per dollar.

Bonds

The yield on benchmark 10-year Treasuries dropped four basis points to 2.85 percent. The three-year note yield fell five basis points to 2.72 percent as the yield on the five-year note dropped five basis points to 2.70 percent.Germany’s 10-year yield rose one basis point to 0.29 percent.

Commodities

West Texas Intermediate crude rose 1.9 percent to $52.48 a barrel. Gold rose 0.9 percent at $1,249 an ounce.LME copper climbed 1.2 percent to $6,145 per metric ton, the first increase in four days.

To contact the reporters on this story: Vildana Hajric in New York at vhajric1@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

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