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Reuters

US stocks finished sharply lower on Tuesday after a surprisingly wide March US trade deficit raised concerns that the economy shrank in the first quarter.
The US$51.4 billion March deficit was the highest in nearly 6-1/2 years and larger than the $45.2 billion the government assumed in its snapshot of first-quarter gross domestic product last week, suggesting the economy had contracted.
"A negative number is scary for the market," said Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Investments.
"It was something of a one-two punch between the trade-deficit report and higher interest rates that began overseas," he said of Tuesday’s stock selloff.
Long-term US Treasury yields rose on Tuesday to their highest level this year as investors reassessed their view on the global economy.
The Dow Jones industrial average closed down 142.53 points, or 0.79 per cent, to 17,927.87, the S&P 500 ended 25.01 points lower or 1.18 per cent to 2,089.48 and the Nasdaq Composite finished down 77.60 points, or 1.55 per cent, to 4,939.33.
The MSCI world equity index, which tracks shares in 45 nations, fell 0.9 per cent, to 435.09.
The pan-European FTSEurofirst 300 equity index shed 1.6 percent at 1,555.46, erasing an earlier gain spurred by an almost 7 per cent jump in UBS shares.
While worries intensified about Asia’s biggest economies, the European Commission said euro zone economic growth would be stronger than previously expected this year.
Prices of major government bonds declined in an ongoing market pullback. Safe-haven German Bunds’ 10-year yields touched 0.535 percent, the highest since January.
This has also led investors to dump US Treasuries, sending the 30-year bond yield to 2.934 per cent, the highest in five months and above its 200-day moving average. The 30-year yield was last 2.892 per cent.
In the currency market, the mixed US data spurred selling in the dollar, especially against the euro. The single currency was up 0.44 percent at $1.1193.
Brent crude settled up $1.07, or 1.61 per cent, at $67.52 a barrel. US crude settled up $1.47 or 2.49 per cent at $60.40. Spot gold prices rose $6.1 or 0.51 per cent, to $1,193.80 an ounce.
With corporate earnings season winding down, US investors are bracing for an April payroll report due on Friday that could give a hint of when the US Federal Reserve will begin raising interest rates.
All 10 major S&P sectors fell, with the utilities index slumping 2.28 per cent as investors dumped dividend stocks to take advantage of yields on benchmark 10-year Treasury notes.
Despite a rally of 2 per cent in oil, energy stocks were stung for a second day by criticism of fracking companies by David Einhorn, the influential head of hedge fund Greenlight Capital. The energy sector fell 1.10 per cent.
Weighed down by a 2.25 per cent decline in Apple, technology stocks were the biggest drag on the three major indexes, erasing the Nasdaq’s gains of the past two days.
Tuesday’s decline in stocks is only the most recent of several volatile sessions. Over the two weeks through Friday, the S&P 500 moved an average of 17.79 points daily, wider than the 12.43 point range in early March.
Declining issues outnumbered advancing ones on the NYSE by 2,452 to 610, for a 4.02-to-1 ratio; on the Nasdaq, 2,084 issues fell and 676 advanced for a 3.08-to-1 ratio.
The benchmark S&P 500 posted 16 new 52-week highs and no new lows; the Nasdaq Composite recorded 39 new highs and 68 new lows. About 7.3 billion shares changed hands on U.S. exchanges, above the 7.0 billion daily average for the last five sessions, according to BATS Global Markets.
 


Wall Street pummeled by US trade data; treasury yields hit 2015 peak

A trader gestures on Wall Street in New York after US stocks ended sharply lower over weak US trade data. Photo: AP

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