Stocks Kick Off November With Declines
Treasurys and gold rally as investors broadly retreat from risk
By Riva Gold and Akane Otani Updated Nov. 1, 2016 3:09 p.m. ET
U.S. stocks fell, while Treasurys and gold rallied as investors broadly retreated from risk Tuesday afternoon.
Investors have been cautious ahead of a series of upcoming events this month, including the U.S. election, the rest of the third-quarter earnings season and meetings of the Federal Reserve and Bank of England later this week.
The CBOE Volatility Index, which measures investors’ expectations for stock swings in the next 30 days, rose 13% to 19.32 and was on track to close at its highest level since June 27, shortly after the Brexit vote.
“When we have conversations with clients, there’s definitely a bit of hesitation about engaging right now so close to the election,” said David Lefkowitz, senior equity strategist at UBS Wealth Management.
Tuesday’s declines extended a weak stretch for U.S. stocks. The Dow Jones Industrial Average fell for a third straight month in October, its longest monthly losing streak since 2011. The index declined 1.6% in the three months through Monday and hasn’t hit a new high since mid-August.
On Tuesday, the index fell 141 points, or 0.8%, to 18001.
All eleven sectors of the S&P 500 declined, with the broad index down 0.9%. The Nasdaq Composite lost 1%—a day after both indexes closed at their lowest levels since Sept. 14.
Earlier, government bonds sold off, as data showed China’s factory activity rising to its highest level in two years. Concerns about the Chinese economy had spooked markets at the start of the year, but investors said recent data has been more encouraging.
By afternoon, Treasuries reversed course. The yield on the 10-year Treasury note fell to 1.824% from 1.834% on Monday. Yields move inversely to prices.
Gold, another haven asset, climbed 1.2% to $1286.40 an ounce in its largest one-day gain since Sept. 6.
In currency markets, the WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, fell 0.4%. The Federal Reserve is widely expected to keep interest rates unchanged Wednesday but leave the door open to a rise in December. The euro rose 0.8% against the dollar to $1.1059, and the dollar fell 0.8% against Japan’s yen to ¥103.998.
S&P 500 Leaders and Laggards - 1 Day
In commodities, gasoline and diesel prices surged, then retreated slightly, after an explosion in Alabama cut off a major pipeline and raised concerns about fuel shortages. Gasoline futures were recently up 6.6% on the New York Mercantile Exchange. Diesel futures were up 1.4%.
U.S. crude-oil prices fell 0.4% to $46.67 a barrel, and energy shares lost 0.3% in the S&P 500.
Shares of L Brands fell 8.6% after the company said Monday that sales at its Victoria’s Secret stores continued to slow down.
Coach rose 2.3% after the company reported that profit climbed in the latest quarter, while Archer Daniels Midland rose 7.9% after the commodities trader and processor’s profit topped expectations.
European stocks fell across the board. The Stoxx Europe 600 declined 1.1%, the U.K.’s FTSE 100 lost 0.5% and Germany’s DAX fell 1.3%.
Japan’s Nikkei Stock Average inched up 0.1% after the Bank of Japan left its stimulus program unchanged as expected but reduced its inflation forecasts.
Write to Riva Gold at
riva.gold@wsj.com and Akane Otani at
akane.otani@wsj.com