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Power of U.S. Stock Surge Weakens as It Hits Europe

The biggest rally in American equities since 2009 flowed powerfully through to Japanese stocks, but momentum faltered thereafter as U.S. stock-index futures tumbled alongside European shares. Treasuries climbed as oil and the dollar gave up some of the previous session’s advances.

Contracts on the S&P 500, Dow and Nasdaq retreated only hours after the underlying benchmarks soared about 5 percent Wednesday on signs of robust consumer spending. Losses in utility companies and miners dragged the Stoxx Europe 600 Index into the red, after Tokyo’s Topix Index posted the biggest advance in two years, though Asian shares were overall mixed. Havens came back in vogue, with Treasury 10-year yields falling back below 2.8 percent, and gold climbing with the yen.

The euphoria of equity investors has lessened from Wednesday, when strong economic data eased concern about both the tenure of the Federal Reserve chief and progress on U.S.-China trade talks. While just one of the S&P’s 500-plus members fell, and the Dow Jones Industrial Average jumped more than 1,050 points for its biggest-ever point gain, it’s still a horrible month for U.S. stocks. The S&P is down almost 11 percent. Emerging markets are doing better, thanks to expectations of less aggressive tightening by the Fed.

Elsewhere, WTI crude oil prices gave up a slice of the more than 8 percent gain from the previous day. The offshore yuan extended gains from earlier this week on the latest news on trade negotiations being scheduled for next month.

Here are some events investors may focus on in coming days:

U.S. new-home sales are due Thursday. Baker Hughes releases its weekly data on active U.S. oil rigs on Friday. Monday is year end. Brazil’s new president is sworn in on Tuesday.

And these are the main moves in markets:

Stocks

Futures on the S&P 500 Index fell 1.5 percent as of 5:48 a.m. New York time. The Stoxx Europe 600 Index fell 0.7 percent to the lowest in more than two years on the biggest fall in a week. The MSCI All-Country World Index increased 0.2 percent to the highest in a week. The MSCI Emerging Market Index climbed 0.1 percent, the first advance in more than a week.

Currencies

The Bloomberg Dollar Spot Index declined 0.2 percent. The euro rose 0.4 percent to $1.1404, the biggest advance in a week. The Japanese yen jumped 0.6 percent to 110.75 per dollar. The British pound decreased less than 0.05 percent to $1.2632, the weakest in more than a week. The MSCI Emerging Markets Currency Index increased 0.1 percent to the highest in a week on the largest climb in more than a week.

Bonds

The yield on 10-year Treasuries fell four basis points to 2.76 percent. Germany’s 10-year yield decreased two basis points to 0.23 percent, the lowest in a week on the largest tumble in almost two weeks. Britain’s 10-year yield climbed less than one basis point to 1.266 percent. The spread of Italy’s 10-year bonds over Germany’s increased one basis point to 2.5898 percentage points to the widest in more than a week.

Commodities

The Bloomberg Commodity Index decreased 0.3 percent. Brent crude fell 1.6 percent to $53.58 a barrel. LME copper jumped 0.8 percent to $6,003.50 per metric ton, reaching the highest in more than a week on the first advance in more than a week and the biggest increase in more than two weeks. Gold increased 0.4 percent to $1,272.29 an ounce, the highest in more than six months.