(Bloomberg) -- The sell-off in U.S. stocks picked up steam as mixed corporate earnings and weak housing data fueled anxiety that rising prices will crimp economic growth. Treasuries rallied for a second day on demand for haven assets.
The S&P 500 Index extended its October rout to 7.4 percent, reducing this year’s gain for the benchmark index to less than 1 percent. Disappointing earnings from AT&T (NYSE:T) and Texas Instruments (NASDAQ:TXN) drove declines in the communications and semiconductor groups, offsetting a promising outlook from Boeing (NYSE:BA). The Dow Jones Industrial Average fell almost 300 points, and the Nasdaq Composite Index flirted with a correction from it’s record closing high in August.
Amid the flood of earnings that will bring reports from Microsoft (NASDAQ:MSFT) later Wednesday and Alphabet (NASDAQ:GOOGL), Intel (NASDAQ:INTC) and Amazon.com (NASDAQ:AMZN) on Thursday, economic data continues to underwhelm, particularly on the rate-sensitive housing front. New home sales sank again, sending battered homebuilders lower. Fragile market sentiment is also working through reports that potential bombs were sent to two former U.S. presidents and the New York headquarters of CNN.
“There’s just right now a heightened sensitivity to what can go wrong,” Kate Warne, investment strategist at Edward D. Jones & Co., said in an interview at Bloomberg’s New York headquarters. “So we will have more of these days where stocks move a lot within the day as everyone’s trying to sort through what do today’s reports mean.”
European politics is also in focus, with Italian Prime Minister Giuseppe Conte doubling down on his government’s budget and U.K. Prime Minister Theresa May’s cabinet descending into conflict. The pound weakened, and the region’s bonds rallied. The euro dropped following disappointing manufacturing data. Retailers were the biggest winners in the Stoxx Europe 600 Index. A turnaround in China’s markets helped the MSCI Asia Pacific Index avoid a bear market even as it edged down.
“Right now markets are still trying to reprice,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. “What’s happening with earnings is exaggerating market moves.”
Elsewhere, oil rebounded after touching the lowest in almost two-months on a pledge by Saudi Arabia to meet any shortfall that materializes from Iranian sanctions. Emerging-market currencies and shares were mostly lower.
Terminal readers can read more in our Markets Live blog.
Here are some key events coming up this week:
- Earnings season rolls on with notable highlights including Twitter, UBS and Total.
- Monetary policy decisions are due in Sweden and Canada.
- ECB policy makers could on Thursday confirm that asset purchases will end this year, reiterating its pledge to keep interest rates at record lows through summer 2019. President Mario Draghi will hold a press conference.
- U.S. gross domestic product growth may have slowed in the third quarter, yet remained near its best pace since mid-2015, according to forecasts ahead of Friday’s release.
These are the main moves in markets:
Stocks
- The S&P 500 dropped 1.8 percent as of 2:09 p.m. in New York, while the Dow Jones Industrial Average slumped 1.1 percent and the Nasdaq Composite Index eased 2.7 percent.
- The Stoxx Europe 600 slipped 0.2 percent, the sixth consecutive decline.
- The U.K.’s FTSE 100 gained 0.1 percent, the first increase in three days.
- Germany’s DAX Index slumped 0.7 percent, the sixth straight drop.
- The MSCI Emerging Market Index eased 0.7 percent.
- The MSCI Asia Pacific Index slumped 0.4 percent.
Currencies
- The Bloomberg Dollar Spot Index was 0.4 percent stronger, reaching the highest level of the year.
- The euro declined 0.7 percent to $1.1391.
- The British pound fell 0.7 percent to $1.2898.
- The Japanese yen weakened 0.1 percent to 112.56 per dollar.
Bonds
- The yield on 10-year Treasuries dropped four basis points to 3.13 percent, while the two-year note yield fell two basis points to 2.86 percent.
- Germany’s 10-year yield fell one basis point to 0.40 percent.
Commodities
- West Texas Intermediate crude rose 1.4 percent to $67.36 a barrel.
- Gold slumped 02 percent at $1,228.06 an ounce.