By Caroline Valetkevitch
NEW YORK (Reuters) -Gold prices declined again on Wednesday, a day after spot gold had its sharpest single-day drop in over five years, while most major stock indexes fell with Netflix shares down after the company’s outlook disappointed.
Gold, one of the year’s best-performing trades, slid as investors booked profits. It remains on course for its strongest year since the 1979 oil crisis and is up more than 50% so far this year. Spot gold fell 1.49% to $4,062.39 an ounce.
Shares of Netflix were down about 10%, and Wall Street’s three major indexes were sharply lower in afternoon trading. Investors are getting ready for results after the close from Tesla, which will kick off earnings season for the so-called Magnificent Seven group of megacap stocks. Tesla shares were down about 2.5%.
Investors also digested developments on the trade front. Reuters reported, citing a U.S. official and three people briefed by U.S. authorities, that the Trump administration is considering a plan to curb a dizzying array of software-powered exports to China, from laptops to jet engines, to retaliate against Beijing’s latest round of rare earth export restrictions.
“It looks like we’re letting a little air out of the balloon,” said Oliver Pursche, senior vice president, at Wealthspire Advisors in Westport, Connecticut. “Given the sharp rally and gains that we’ve made year to date, and in particular since the beginning of April, combined with the concerns over future economic growth and the absence of data due to the government shutdown, there’s no reason to make material moves in either direction,” he said, but maybe “you’re going to take some profits; you’re going to do some rebalancing.”
The Dow Jones Industrial Average fell 392.08 points, or 0.84%, to 46,529.77, the S&P 500 fell 67.23 points, or 1.01%, to 6,667.43 and the Nasdaq Composite fell 385.72 points, or 1.69%, to 22,567.94.
MSCI’s gauge of stocks across the globe fell 7.29 points, or 0.73%, to 987.56.The pan-European STOXX 600 index fell 0.18%.
However, London stocks rose for a third consecutive day as investors increased bets on interest rate cuts from the Bank of England after data showed inflation unexpectedly held steady. The blue-chip FTSE 100 gained 0.9%.
U.S. Treasury yields dipped, though the market was range-bound as the U.S. government shutdown went into its 22nd day with no resolution in sight. The yield on benchmark U.S. 10-year notes fell 1 basis points to 3.953%, from 3.963% late on Tuesday.
The Federal Reserve meets next week, and investors have almost fully priced in a 25-basis-point rate cut.
The dearth of U.S. economic data due to the ongoing shutdown means that policymakers could be left flying blind at the meeting, a less-than-ideal situation as they remain divided over which risks deserve the most attention.
The yen rose against the dollar. Sources told Reuters that new Prime Minister Sanae Takaichi is preparing an economic stimulus package likely to exceed last year’s 13.9 trillion yen ($92.19 billion) to help households tackle inflation.
The Bank of Japan also meets next week, where expectations are for the central bank – like the ECB in Europe – to stand pat on rates.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,fell 0.14% to 98.84, with the euro up 0.15% at $1.1615. Against the Japanese yen, the dollar weakened 0.18% to 151.66.
Oil prices were higher. U.S. crude rose 2.25% to $58.53 a barrel and Brent rose to $62.58 per barrel, up 2.05% on the day.
(Reporting by Caroline Valetkevitch; Additional reporting by Marc Jones in London; Editing by Mark Potter, Peter Graff and Cynthia Osterman)
