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Pedestrians are reflected in the window of the Nasdaq MarketSite in New York, U.S. Photographer: Victor J. Blue/Bloomberg(bloomberg)
(Bloomberg) -- The biggest technology shares led a retreat in stocks as investors showed signs of exhaustion with the sector. Government bonds declined and oil rallied.
The Nasdaq Composite Index sank 1.4 percent as the gauge posted its biggest three-day loss since March. The FANG cohort of tech megacaps tumbled almost 3 percent, led by Netflix Inc., leaving the group down more than 9 percent since Facebook Inc.’s disappointing earnings results last week.
“The Nasdaq is tired,” Steven Quirk, the executive vice president of trading at TD Ameritrade, said in an interview at Bloomberg’s New York headquarters. “There needs to be some more breadth to the rally.”
The euro strengthened and the dollar dropped. U.S. oil futures climbed past $70 a barrel for the first time in more than a week as a weaker greenback boosted the appeal of commodities and concerns over supply disruptions persisted.
Concern that tech shares have become overvalued are hanging over the market as bellwether Apple Inc. prepares to report earnings Tuesday. Equity strategists are telling clients to allocate more defensively, with Morgan Stanley’s Michael Wilson saying the sector is showing signs of “exhaustion” after months of outperformance.
Investors are also prepping for central bank policy decisions, with traders focused on whether the BOJ will fine tune its policy and look for any indications the Federal Reserve is shying away from two more interest-rate hikes before the end of this year. Meanwhile, the Bank of England is widely expected to increase borrowing costs.
Elsewhere, emerging-market stocks slipped after a four-day winning streak. Turkey’s lira fell as the country’s president showed little regard for potential U.S. sanctions.
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Here are some key events coming up this week:
- The U.S. Treasury is set to release its funding program for the next three months on Aug. 1.
- Earnings season continues with Berkshire Hathaway, Barclays, Tesla, Toyota, BMW, and Rio Tinto among companies reporting results.
- Central banks in the U.S., Japan, the U.K., Brazil and India all meet this week. The BOJ may tweak its yield-curve control policy and cut its CPI forecasts, while the Bank of England is expected to hike even amid Brexit gloom. The Fed is seen standing pat, as is Brazil’s central bank. The RBI will probably raise its benchmark.
- U.S. personal spending and income data for June -- coming Tuesday -- may be steady. Then it’s the jobs report on Friday, which is predicted to show a healthy labor market, with 193,000 new jobs, and an unemployment rate slipping back to 3.9 percent.
- China’s PMIs probably edged down in July, analysts say, buffeted by a deleveraging agenda and a trade war.
These are the main moves in markets:
- The S&P 500 Index slipped 0.6 percent at the close of trading in New York; the Nasdaq Composite fell 1.4 percent while the Dow dipped 0.6 percent.
- The Stoxx Europe 600 Index fell 0.3 percent.
- The MSCI Emerging Market Index dropped 0.2 percent.
- The Bloomberg Dollar Spot Index dipped 0.2 percent.
- The euro rose 0.4 percent to $1.1705.
- The British pound gained 0.2 percent to $1.3131.
- The Turkish lira fell 0.7 percent.
- The yield on 10-year Treasuries rose two basis points to 2.98 percent.
- Germany’s 10-year yield rose four basis points to 0.44 percent.
- Britain’s 10-year yield jumped six basis points to 1.34 percent, the highest in almost seven weeks.
- Japan’s 10-year yield decreased less than one basis point to 0.091 percent.
- The Bloomberg Commodity Index increased 0.6 percent to the highest in three weeks.
- West Texas Intermediate crude jumped 1.9 percent to $69.98 a barrel.
- Copper fell 0.3 percent to $2.7925 a pound.
- Gold slipped 0.2 percent to $1,221.46 an ounce.
--With assistance from Adam Haigh, Lu Wang, Christopher Anstey, Eddie van der Walt and Samuel Potter.
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