US stocks slide as oil retreats after weak China data

Traders working on the floor of the New York Stock Exchange on March 7, 2016.
Traders working on the floor of the New York Stock Exchange on March 7, 2016.PHOTO: AFP

NEW YORK (BLOOMBERG) - The Standard & Poor's 500 Index fell the most in two weeks, led by a selloff in energy shares, after worsening economic data from Asia reignited concern over the outlook for global growth.

Commodity companies and banks, pillars of the market's recent gains, paced declines. Energy producers in the S&P 500 fell the most in six weeks as oil retreated, while the Russell 2000 Energy Index posted the biggest drop since November 2014.

The S&P 500 slid 1.1 per cent to 1,979.26, its first decline in March to end its longest winning streak in five months. The Dow Jones Industrial Average fell 109.85 points, or 0.6 per cent, to 16,964.10 after nearly erasing a 152-point drop. The Nasdaq Composite Index slipped 1.3 per cent, while the Russell 2000 Index declined 2.4 per cent, the most in a month.

"You have to consider China data coming in the way it did because then you have a potential for the global slowdown, but that's a story that's pretty well understood," said Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in New York. "We're digesting this steady move up we've had that hasn't really had a bout of risk-off considering it was a huge bounce off the bottom. A lot of people are looking out to the ECB and one comment from Draghi could bring us into risk-off."

Equities fell Tuesday as data showed Japan's economy and Chinese exports are shrinking, reviving anxiety that monetary policy won't be enough to support global economy. The declines also come after the S&P 500's best three-week stretch since 2014, as investors reined in risk-taking before gatherings of central bankers in Europe and the US.

Energy producers in the benchmark slid with crude, down 4.1 per cent for the biggest drop since Jan. 25 after a 14 per cent gain during the past three weeks. Banks fell for a second session after halting a four-day advance Monday, a sign that momentum in the group was slowing following a 15 per cent rebound from nearly three-year lows. Apache Corp and Transocean Ltd sank at least 9.5 per cent, while Citigroup Inc decreased 3.7 per cent.

West Texas Intermediate crude dropped 3.7 per cent, after closing Monday at its highest since Dec 24., on expectations that reports will show US inventories rose last week to an eight-decade high.

Investors are looking to Thursday's European Central Bank policy update, and next week's Federal Reserve gathering for indications of the trajectory of interest rates and potential for further stimulus. Speculation for additional moves from the ECB to boost growth, along with nascent stability in crude prices and improving US data have helped global equities rebound during the past three weeks.

Traders are pricing in a less than one-in-10 chance the Fed will raise borrowing costs this month. Odds for a September move have risen to about 57 per cent from less than 35 per cent two weeks ago, though the probability slipped from 59 per cent on Tuesday following the data from China and Japan.