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U.S. Stocks Drop to Start 2019 as Safe Havens Rally

U.S. stocks fell as investors began the new year anxious about the same issues that sent equities to the worst December rout since the Great Depression. Safe havens rallied, with gold, bonds and the yen higher.

The S&P 500 Index retreated, though losses were less than the overnight futures session suggested. The latest blow to investor sentiment came from a weak reading on Chinese manufacturing, adding to concern that global growth is slowing. That overshadowed signs President Donald Trump may be willing to make a deal to end a government shut down. Trade tensions also remained in focus ahead of high-level talks slated for next week.

The 10-year Treasury yield slid to the lowest in 11 months, similar-maturity German bunds surged and the yen strengthened to to a six-month high, with investors piling into haven assets as the equity sell-off persists. Crude dropped back below $45 a barrel in New York.

The risk-off tone that gripped markets in December remained in place to start 2019, with the threat of rising rates, an escalating trade war and slowing growth still looming. While Trump made positive noises about reaching a trade deal with his counterpart Xi Jinping over the weekend, the Chinese data are a stark example to investors that the protectionist showdown is starting to have an impact on economic activity. Here’s (Almost) Everything Wall Street Is Expecting in 2019

“The trend remains lower for now,” Kyle Rodda, an analyst at IG Group Holdings Plc, told Bloomberg Television. “We’ve had rate hikes from the Fed effectively priced out, so we are looking at a situation when markets are thinking that we are entering a period of slower growth.”

Elsewhere, the dollar rose as the euro and pound slid — the latter falling even as U.K. manufacturing growth unexpectedly improved. West Texas crude dropped below $45 per barrel and gold headed for a six-month high. Emerging-market equities slumped.

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

The U.S. December jobs report is due Friday. Fed Chair Powell is interviewed with predecessors Janet Yellen and Ben Bernanke at the annual meeting of the American Economic Association Friday. Atlanta Fed President Raphael Bostic joins a panel on long-run macroeconomic performance.And these are the main moves in markets Wednesday:

Stocks

The S&P 500 Index declined 1.1 percent as of 9:51 a.m. in New York. The Stoxx Europe 600 Index decreased 0.8 percent. The U.K.’s FTSE 100 Index dipped 0.8 percent. Germany’s DAX Index fell 0.4 percent. The MSCI Asia Pacific Index declined 1 percent, hitting the lowest in a week with the first retreat in more than a week. The MSCI Emerging Market Index sank 1.6 percent, reaching the lowest in two months on the first retreat in a week and the biggest tumble in more than three weeks.

Currencies

The Bloomberg Dollar Spot Index climbed 0.4 percent, the first advance in a week and the largest increase in more than a week. The euro sank 0.7 percent to $1.1381, the weakest in a week on the biggest dip in six weeks. The British pound sank 0.9 percent to $1.2624, the weakest in two weeks on the largest decrease in more than three weeks. The Japanese yen gained 0.7 percent to 109.00 per dollar, the strongest in seven months on the biggest rise in more than a week.

Bonds

The yield on 10-year Treasuries fell three basis points to 2.65 percent, its fifth straight decline. Germany’s 10-year yield sank nine basis points to 0.15 percent, the lowest in more than two years on the biggest tumble in more than two years. The spread of Italy’s 10-year bonds over Germany’s climbed four basis points to 2.5392 percentage points to the biggest premium in a week.

Commodities

West Texas Intermediate crude dipped 1.6 percent to $44.69 a barrel. Gold rose 0.3 percent to $1,286.46 an ounce, reaching the highest in almost seven months on its fifth consecutive advance.