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Three major Wall Street indexes close lower
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Benchmark 10-year yields hit new high
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European shares fall
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Oil prices slip
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U.S. dollar rises, safe-haven gold drops
(Adds prices and details after U.S. markets close)
By Chibuike Oguh
NEW YORK, Feb 21 (Reuters) - Global equity markets fell
while U.S. Treasury yields hit new highs on Tuesday as investors
weighed the prospects of a longer-than-anticipated stiff
monetary policy stance by the Federal Reserve following
continued strong economic data.
Market sentiment has remained bearish after Fed officials
signaled last week that the U.S. central bank was likely to keep
raising interest rates for longer than was previously forecast
in its bid to tame inflation.
The Fed will release the minutes of its last meeting on
Wednesday, which will give traders a glimpse of how high
officials are projecting interest rates will go after recent
data showed stronger-than-expected U.S. employment and consumer
prices.
A survey released on Tuesday showed that U.S. business
activity unexpectedly rebounded in February, reaching its
highest level in eight months, and reaffirming the resilience of
the U.S. economy despite the Fed's monetary policy actions.
Benchmark 10-year note yields jumped to the
highest since Nov. 10 and were at 3.9584%. The yield curve
between two-year and 10-year notes remained
deeply inverted at minus 78 basis points, indicating heightened
concerns over an impending recession.
"The Fed has a conundrum because as long as people are
working, they spend money on specific things that's rotating
like travel, home improvement, etc.," said Tom Plumb, portfolio
manager at Plumb Balanced Fund in Madison, Wisconsin.
"Anytime the market tries to convince itself that the Fed
will take its foot off the brakes sometime soon, they get
slapped with reality that it's probably not going to happen for
the next six months or so," Plumb added.
The MSCI world equity index , which tracks
shares in 50 countries, was down 1.59%. European stocks fell as much as 1% before clawing back some of their losses, and
closed down 0.19%.
On Wall Street, all three major indexes ended lower, led by
selloffs in technology, consumer discretionary, industrials and
financial stocks. The Dow Jones Industrial Average fell
2.06% to 33,133.34, the S&P 500 lost 2.01% to 3,997.39
and the Nasdaq Composite dropped 2.50% to 11,492.55.
Oil prices slipped in a volatile session as persistent
concerns about global economic growth outweighed supply curbs
and prompted investors to take profit on the previous day's
gains.
Brent crude settled 1.2% lower at $83.05 per barrel,
while the U.S. West Texas Intermediate crude (WTI) for
March, which expires on Tuesday, fell 0.2% to $76.16 per barrel.
The second-month contract slipped 0.38% to $76.16 a barrel.
The dollar rose against most major currencies amid data
showing the strengthening of the U.S. economy. The dollar index was trading up at 0.289%. The euro was down 0.37%
at $1.0642 as it came under pressure after data showed euro zone
manufacturing activity deteriorated.
Gold prices dropped as the dollar edged higher and bond
yields rose. Spot gold dropped 0.4% to $1,834.50 an
ounce, while U.S. gold futures fell 0.32% to $1,834.50 an
ounce.
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World FX rates YTD ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Chibuike Oguh in New York; Editing by Sharon
Singleton and Matthew Lewis)
