The Nasdaq Composite Index tumbled as biotechnology shares headed for the biggest decline in five years. The weaker dollar boosted emerging-market equities toward the highest level since August, while U.S. oil climbed past $48 a barrel.
The Nasdaq Biotechnology Index plunged more than 6 percent as concerns about drug pricing and earnings rekindled selling. Crude rose 5 percent in New York as the Bloomberg Dollar Spot Index dropped for a fourth day, boosting prices in commodities from gold to copper. The MSCI Emerging Markets Index climbed for a fifth day even as a chorus of warnings about growth in developing nations picked up voices.
Weaker dollar aids crude advance
Weaker dollar aids crude advance
“We’ve had five really good days in a row, it’s not surprising that we’re getting a little bit of a pullback,” said Michael Mullaney, who oversees $11.5 billion as the Boston-based chief investment officer at Fiduciary Trust Co. “Probably a little bit of short-term bias fatigue.”
The Standard & Poor’s 500 Index was poised to halt a five-day rally that added almost $700 billion to equity values and put the gauge near a level where previous advances from an August low have faltered. Disappointing U.S. data have fueled speculation the Federal Reserve will keep interest rates near zero, prompting demand for riskier assets. The International Monetary Fund cited a slowdown in emerging markets for cutting its outlook for global growth, while Anshu Jain said some developing nations remain a worry.
The S&P 500 fell 0.6 percent to 1,976.16 at 12 p.m. in New York. The index surged within 1 percent of 2,000 yesterday, where previous advances from an August low ended. The Dow Jones Industrial Average added was little changed as DuPont Co. surged 10 percent after replacing its chief executive officer.
Biotechnology stocks in the S&P 500 plunged 3.1 percent on Tuesday, leading the Nasdaq Composite Index to a loss of 1 percent. Illumina Inc. shares fell 14 percent in after the company forecast fourth-quarter sales below analysts’ estimates. Vertex Pharmaceuticals Inc. sank 8 percent for the biggest drop in the S&P 500.
Shares of energy, raw-material and industrial companies led the recent rally amid speculation that a weaker U.S. currency will lift profits for multinational companies which benefit when their overseas earnings are converted back to dollars. Alcoa Inc. will kick off the earnings season after the markets close on Oct. 8. Analysts project income for S&P 500 members dropped 6.9 percent in the third quarter.
In Europe, the Stoxx 600 Index jumped 0.6 percent for a third day of gains that left it at the highest level since Sept. 17. Investors are speculating that recent disappointing economic data will give central banks pause for thought before they tighten policies.
The Bloomberg Commodity Index jumped 1.6 percent to the highest level since August. Oil rose above $48 a barrel for a third day of gains as West Texas Intermediate added 4.9 percent and Brent rose 5 percent to $51.72. U.S. crude production dropped 120,000 barrels a day in September from the prior month, according to the U.S. Energy Department’s monthly Short-Term Energy Outlook.
Gold climbed 1 percent to $1,148.30 an ounce after bets shrank for a U.S. rate increase this year. Platinum jumped 0.7 percent. Copper rose 0.3 percent.
Treasuries were little changed, with the benchmark 10-year note yield at 2.04 percent. The rate climbed six basis points on Monday.
Futures traders have been trimming bets the Fed will boost rates this year even as officials including Chair Janet Yellen and New York Fed President William C. Dudley have said they expect to act in 2015. Goldman Sachs Group Inc. says there’s a chance the Fed will delay its planned interest-rate increase well into 2016, or even later.
European bonds declined, with the yield on the 10-year Portuguese security five basis points higher at 2.35 percent, and the German bund yield up four basis points at 0.61 percent.
The Bloomberg Dollar Spot Index fell 0.5 percent for a fourth straight decline. The Brazilian real and Norwegian krone strengthened the most versus the greenback.
The Australian dollar strengthened for a fifth day as traders pared bets that the central bank will lower interest rates this year after keeping them unchanged at a record low of 2 percent on Tuesday.
“While there was chatter over the previous weeks and days that the bank was considering doing more, there doesn’t seem to be any rush to do so,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “We’re looking for Aussie to continue squeezing higher.”
Australia’s dollar gained 0.4 percent to 71.08 U.S. cents, after touching 71.34, the strongest since Sept. 22. The euro added 0.3 percent to $1.1226, while the U.S currency slipped 0.1 percent to 120.30 yen.
Emerging Markets
The MSCI Emerging Markets Index rose 1.1 percent, advancing for a fifth day. The recent selloff in developing-market assets, including Mexico’s peso and Malaysia’s ringgit, has opened up investment opportunities not seen for decades, according to Franklin Templeton’s Michael Hasenstab, who’s well known for making contrarian bets.
A gauge of emerging market currencies climbed for a third day to the highest in two weeks.
Hong Kong’s Hang Seng China Enterprises Index advanced 0.5 percent, its fourth day of gains and longest rally since April. Markets in mainland China are set to reopen Thursday after a week-long National Day holiday.