There was no respite for equities markets on Thursday, with a decline in US stocks sparing no sectors and deepening a selloff that has spread across the globe.
The S&P 500 benchmark posted its sixth-straight day of losses, marking the longest losing streak since US President Donald Trump took office and hitting its lowest level since July. The index drifted below its 200-day moving average, an indication that support may be waning.
The Dow Jones Industrial Average lost more than 5% since Tuesday, its biggest two-day loss in eight months.
Trump betrayed a level of concern about the slide in US stocks, lashing out at the Federal Reserve’s interest-rate policy, which he characterized as “ridiculous.”
He has variously described the Fed in recent days as “out of control,” “crazy,” and “going loco.”
Stocks rose off of early lows after news from The Wall Street Journal that Trump has decided to meet with Chinese President Xi Jinping on the sidelines of the Group of 20 leaders’ summit at the end of this month.
The meeting was reportedly urged by US Treasury Secretary Steven Mnuchin and National Economic Council director Larry Kudlow, who have spearheaded efforts to reach a deal with China on trade in the past. But any optimism that the meeting could lead to a breakthrough is tempered by the perception that Mnuchin lost the confidence of his interlocutors in Beijing after he was undercut by trade hawks in the White House last May.
After close of trading, news broke that the US Treasury Department would not advise Mnuchin to label China a currency manipulator.
There was no single headline that prompted the selloff this week, though analysts have broadly attributed the declines to a rise in interest rates and ripple effects from trade tensions.
Economist David Goldman noted earlier on Friday an “extremely close correlation between the equity market index, the ‘real’ (inflation-protected) 10-year Treasury yield, and the price of crude oil.”
During such a “deflation trade,” commodities and stocks fall along with real interest rates, as volatility spikes, he wrote.