Global markets were hit by a broad risk-off move as investors dumped equities and oil on worries that economic growth was weakening. The U.S. dollar strengthened as money moved into safer assets.
U.S. stocks extended their decline after several retailers, including Target Corp and Kohl’s Corp, reported results and forecasts that disappointed investors. Consumer discretionary shares were among the weakest performers in the session.
Apple Inc also fell further after Goldman Sachs cut its price target for the stock for the second time in a little more than a week. The downgrade came as concerns persisted over softer demand for the iPhone.
Quincy Krosby, chief market strategist at Prudential Financial, said: “It’s the market adjusting to an early 2019 that looks different from the months of 2018 in that there have been mounting concerns over global growth,”
Oil prices tracked the equity sell-off and dropped more than 6 percent, with traders weighing slowing global demand and rising U.S. production against expected supply cuts from the Organization of the Petroleum Exporting Countries (OPEC).
The decline in crude deepened after U.S. President Donald Trump said the United States intends to remain a “steadfast partner” of Saudi Arabia even though “it could very well be” that Saudi Crown Prince Mohammed bin Salman knew about the killing of journalist Jamal Khashoggi. The remarks eased some fears that tensions between Washington and Riyadh could disrupt supplies.
U.S. crude futures fell $3.77, or 6.59 percent, to settle at $53.43 a barrel. Brent crude futures ended $4.26 lower at $62.53 a barrel, a drop of 6.38 percent. U.S. crude has now lost more than 30 percent from a near four-year peak reached in early October.
Jim Ritterbusch, president of Ritterbusch and Associates, said: “When the stock market comes off 8 or 9 percent, it tends to conjure up images of a weak global economy and that feeds into expectations of weaker-than-expected oil demand,”
The dollar index, which measures the greenback against six major currencies, rose 0.7 percent. The yen and Swiss franc also gained as investors sought shelter from the sell-off.
The benchmark 10-year U.S. Treasury yield touched a seven-week low before later moving back above that level. The euro fell 0.72 percent to $1.1368, reflecting weakness in European equities.
In Europe, the pan-European STOXX 600 closed 1.1 percent lower, with technology shares lagging. Automakers also extended losses after the arrest of Renault SA and Nissan Motor Co Ltd chairman Carlos Ghosn on allegations of financial misconduct.
MSCI’s gauge of stocks across the globe fell 1.62 percent. On Wall Street, the Dow Jones Industrial Average dropped 551.8 points, or 2.21 percent, to 24,465.64. The S&P 500 lost 48.84 points, or 1.82 percent, to 2,641.89, while the Nasdaq Composite declined 119.65 points, or 1.7 percent, to 6,908.82.
Benchmark 10-year notes last fell 1/32 in price to yield 3.0628 percent, compared with 3.059 percent late on Monday.
