US Stocks Plummet in Worst Trading Day of the Year

People's Bank of China Governor Yi Gang said the nation won't use exchange rates as a tool in the escalating trade dispute with the U.S. Yet for President Trump, the latest decline in the yuan is "called 'currency manipulation."' The American leader also indicated he'd like the Federal Reserve to act to counter the Chinese action. Swaps show bets the central bank will ease by 100 basis points by December 2020, a quarter point more than what was priced in after last week's cut.

The trade war has been a consistent catalyst for market volatility and hopes of a resolution are now being sent even further out in the horizon, according to Mike Loewengart, vice president of investment strategy at E*Trade Financial Corp. While that could continue to challenge portfolios, investors should not make the mistake of trying to time the markets amid the sell-off, he said.

"This too shall eventually pass, and bouts of volatility in recent months have shown this can happen quickly," said Loewengart.

These are some key events to watch out for this week:

• Earnings from financial giants include: UniCredit, AIG, ABN Amro Bank, Standard Bank, Japan Post Bank.
• Five Asian central banks have rate decisions including India, Australia and New Zealand.
• A string of Fed policy makers speak this week, including St. Louis chief James Bullard on Tuesday and Chicago's Charles Evans a day later. All are Federal Open Market Committee voters.

Here are the main moves in markets (all sizes and scopes are on a closing basis):

Stocks

• The S&P 500 declined 3.1% to 2,842.37 as of 3:28 p.m. New York time.
• The Stoxx Europe 600 Index decreased 2.3%.
• The MSCI Asia Pacific Index dipped 2.4%.
• The MSCI Emerging Market Index decreased 3.2%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The euro advanced 0.8% to $1.12.
• The Japanese yen increased 0.4% to 106.13 per dollar.

Bonds

• The yield on 10-year Treasuries declined 10 basis points to 1.74%.
• Germany's 10-year yield decreased two basis points to -0.52%.
• Britain's 10-year yield dipped four basis points to 0.512%.

Commodities

• The Bloomberg Commodity Index decreased 0.6%.
• West Texas Intermediate crude declined to $54.69 a barrel.
• Gold increased to $1,476.50 an ounce.

– With assistance from Tracy Alloway, Andreea Papuc, Samuel Potter, Laura Curtis, Todd White, Olivia Rinaldi, Nancy Moran, Lu Wang and Sophie Caronello.

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