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S&P 500 shares drop 10 per cent

NEW YORK (BLOOMBERG) – A rebound in stocks sputtered, with the S&P 500 extending a slide from its July peak to 10 per cent – and falls into a “correction.” Oil topped USD85 and gold hit USD2,000 amid the latest geopolitical developments.

Volatility resurfaced on news that Israeli forces are expanding their activity in Gaza. The benchmark stock gauge headed toward its worst week in a month. JPMorgan Chase & Co dropped as Chief Executive Officer Jamie Dimon plans to sell shares currently worth about USD141 million. Inc and Intel Corp rallied on earnings. Treasury two-year yields edged lower as traders took a hotter inflation measure in stride. The dollar fell.

US stocks are in their third month of declines after bond yields soared on worries about a persistently hawkish Federal Reserve. Concern about the war in the Middle East as well as an underwhelming corporate earnings season have dented risk appetite more recently.

“The aggressive market selloff has been driven largely by technical factors, as fundamentals remain solid,” said Mark Hackett, chief of investment research at Nationwide. “This is fitting, given the strong bounce since last October was also largely technical. Signs of oversold conditions and supportive seasonality should lead to a bounce, though sentiment will need to shift, which could take a catalyst or a period of capitulation.”

More than two-thirds of stocks for companies in the S&P 500 index are trading below their 200-day moving averages, according to an analysis by Bloomberg Intelligence. That’s a sign of widespread pain for stock prices, after many companies have posted lacklustre earnings amid interest rates that are high and bond yields that keep creeping up.

In economic news, US near-term inflation expectations rose in October to a five-month high as they feared higher prices at the gas pump, reinforcing downbeat views on the economy. The Fed’s preferred measure of underlying inflation accelerated to a four-month high in September and consumer spending picked up, keeping the door open to another interest-rate hike in the months ahead.

Vehicles are reflected in a window as electronic boards display stock information at the Australian Securities Exchange, operated by ASX Ltd, in Sydney, Australia, on January 11, 2019. PHOTO: BLOOMBERG