US stocks tumble as outlook for retailers sours: markets wrap

US stocks fell as retailers plunged on expectations of a sales slowdown in 2019 and investors weighed the consequences of political tensions in America with the partial government shutdown continuing and the possibility of the China trade dispute easing. West Texas crude slipped below $52 a barrel after Wednesday’s 5% increase, putting it on pace for its first drop in two weeks.

All major equity indexes were lower, with the S&P 500 Index being dragged down by clothing makers and retail. Macy’s Inc. declined 18% after reporting a disappointing seasonal sales and earnings report, dragging down Kohl’s and Target. Barnes & Noble. also said it may cut its profit guidance by as much as 10%. Treasuries and the dollar rose slightly as US filings for unemployment benefits fell to a four-week low.

With the S&P 500 having gained more than 5% in a week following dovish comments on interest rates by the Federal Reserve, the lack of any concrete details from trade discussions between China and the US is leaving few catalysts to drive the benchmarks higher. And as the fight continues over President Donald Trump’s plan to build a wall along the Mexican border, fears about the impact of a prolonged shutdown are starting to take hold.

“In the beginning, we hadn’t gotten much investors calling us or talking about this as a risk,” Mandy Xu, Credit Suisse’s chief equity derivatives strategist, said on Bloomberg Television. “But now as it drags on, definitely we’re seeing more concern.”

The Stoxx Europe 600 Index and UK’s FTSE 100 Index were lower after Jaguar Land Rover said it plans to slash 4,500 jobs worldwide in response to a sales slowdown caused by Brexit. The euro struggled for traction after yet more underwhelming economic data, this time from France. Japanese stocks paced declines across many Asian markets, although the MSCI Asia Pacific Index declined as China inflation data showcased slowing growth. The offshore yuan climbed to the strongest since August.

Elsewhere, the pound weakened as British Prime Minister Theresa May mulled options for a Brexit “Plan B.” Gold fluctuated and emerging-market shares climbed.

Here are some events investors may focus on this week:

Fed Chairman Powell will speak to the Economic Club of Washington D.C. on Thursday. Britain’s Parliament this week resumes a debate on the Brexit withdrawal bill, with Prime Minister Theresa May seeking to avoid defeat in a vote set for the week of  14 January. These are the main moves in markets:

StocksThe S&P 500 Index was down 0.7% at 9:39 a.m. in New York, the first retreat in a week. The Stoxx Europe 600 Index fell 0.3%, the most in a week. The UK’s FTSE 100 Index decreased 0.1%. Germany’s DAX Index declined 0.2%. The MSCI Asia Pacific Index fell 0.1%, the first retreat in more than a week. The MSCI Emerging Market Index jumped 0.3% to the highest in five weeks.

Currencies

The Bloomberg Dollar Spot Index climbed 0.1%. The euro dipped 0.1% to $1.15. The British pound declined 0.2% to $1.27. The Japanese yen rose less than 0.05% to 108.16 per dollar, the strongest in a week.

Bonds

The yield on 10-year Treasuries decreased one basis point to 2.7028%. Germany’s 10-year yield declined two basis points to 0.26%, the first retreat in a week and the biggest decrease in more than a week. Britain’s 10-year yield climbed one basis point to 1.271%. The spread of Italy’s 10-year bonds over Germany’s rose five basis points to 2.6527% points.

Commodities

West Texas Intermediate crude slid 1.1% to $51.77 a barrel, the first retreat in two weeks after entering a bull market on Wednesday. Gold fell 0.1% to $1,292.14 an ounce.

© 2019 Bloomberg L.P