March 2, 2021

U.S. Shares Waver After Drops in Asia and Europe

On Friday, after steep declines in Asia and Europe, the trend carried over to Wall Street, where stocks opened with further losses. But as the trading session wore on, the markets found some footing, wavering between gains and losses but avoiding the extremes often seen in recent weeks.

Analysts were quick to point out that on a day before a summer weekend low volumes could unfold into a bumpy and unpredictable trading session.

“I think it is this wrestling match between the fear and paranoia that drove the market yesterday, and people realizing stocks are really cheap here and bargain hunting,” Uri Landesman, president of Platinum Partners, said.

With deep concerns about the euro zone and global economic growth overshadowing the financial markets, it is not at all clear whether any gains will stick throughout the trading session.

“There are definitely solid arguments on both sides,” Mr. Landesman said. “We could have two or three directional swings by the end of the day.”At noon, the Standard Poor’s 500-stock index, which lost 4.5 percent on Thursday, was about even for the day. The Dow Jones industrial average was down 20 points, or 0.2 percent.

Europe’s major stock indexes ended the day lower. The Euro Stoxx 50 index was off 2.1 percent. The FTSE 100 in London was down 1 percent and the CAC 40 in Paris was down nearly 2 percent. Banks were among the biggest losers once again.

Asia, which had missed the worst of the selling Thursday, suffered painful losses on Friday. The Nikkei 225 index in Japan closed down 2.5 percent, and the key market indices in Singapore and Hong Kong closed down more than 3 percent.

The losses reflected an accumulation of bad news, including feeble economic data in the United States and Europe and signs that some banks were having trouble borrowing on the interbank market. Tension on money markets, which some analysts said was overblown, awoke unpleasant memories of the seizure in interbank lending that followed the collapse of Lehman Brothers in 2008.

“It is specifically risk on, risk off,” said George Rusnak, national director of fixed income for Wells Fargo. “Everybody is taking risk off the table.”

“This is probably going to be a trend over the next several weeks,” he said. “There is not a lot of robust trading going on right now.”

Mr. Rusnak and other analysts again noted that concerns have mounted related to the banking sector, especially with respect to the exposure of American banks to European counterparts.

“Really what it boils down to is ripple effects,” Mr. Rusnak said.

One drag on the American markets on Friday was Hewlett-Packard, which is considering plans to spin off the company’s personal computer business into a separate company and spending $10 billion on Autonomy, a business software maker. It fell more than 20 percent, as the most actively traded share at midday on the technology index, dragging it down nearly 1 percent.

The benchmark 10-year Treasury bond yields crept up to 2.08 percent, compared with 2.06 percent late Thursday, when it touched record lows below 2 percent during the day.

Robert S. Tipp, a managing director and chief investment strategist for Prudential Fixed Income, said global growth concerns and those related to euro zone fiscal health and recent bailouts were undercurrents in the markets.

“Clearly the markets remain on edge not only about the U.S. growth outlook but with the continued tensions among the various parties to the Greek deal,” he said, referring to the recent rescue package for Greece. “The growth outlook being hurt in Europe, and the ongoing sluggish data we have seen in the United States is the underlying issue the stock market is trying to grapple with.”

He said the crisis of confidence was evident as investors parked money in cash and into short-term fixed-income assets.

“Investors are concerned about being able to get, as they say, return of principal, not return on principal,” he added.

Julia Werdigier, Bettina Wassener and Hiroko Tabuchi contributed reporting.

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