(Bloomberg) — U.S. stocks capped the worst week since September 2011 and crude tumbled to a 12-year low as the effects of China’s attempts to shore up financial markets faded. Treasuries posted the biggest weekly advance since October.
The Standard & Poor’s 500 Index extended losses in the final hour of trading, with financial and health-care companies leading declines. Energy shares in the gauge have fallen to the lowest level in more than five years, as oil resumed a slump to below $33 a barrel. Global equities also slid this week by the most in more than four years, even as Chinese authorities moved to stabilize the yuan and quell turmoil in financial markets.
Volatility in Chinese markets spurred a global selloff in riskier assets as concern deepened over the ruling Communist Party’s ability to manage an economic slowdown. U.S. payroll growth surged in December, capping the second-best year for American workers since 1999. While that was further evidence of a resilient job market that prompted the Federal Reserve to raise interest rates, wages grew slower than forecast, adding to disinflation concerns stoked by plunging commodities prices.
“There will remain some jitters about China until they get get through a week or more without having a precipitous drop,” said Peter Jankovskis, who helps oversee $1.9 billion as co-chief investment officer of Lisle, Illinois-based OakBrook Investments. “Given what’s going on in China right now, the market is looking for economic growth and evidence that there’s strength in the U.S. economy. We’re still walking on egg shells, but this is definitely going to help turn a corner.”
The S&P 500 slid 1.1 percent at 4 p.m. in New York, after earlier climbing as much as 0.9 percent. The gauge tumbled 6 percent this week, exceeded the losses it posted amid a market correction in August. Financial stocks in the gauge are trading at their lowest level since October 2014, while the Nasdaq Composite Index fell for a seventh consecutive day.
“The big concern right now is what’s happening overseas, particularly in China,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird, which oversees $110 billion. “Today there was a very strong labor market report that relieved some of that concern. Investors typically sell the first rally after a big selloff, because it’s the first chance they can get out on an uptick. That’s why the first rally after a deep decline is hard to get underway.”
The 292,000 gain in payrolls exceeded the highest forecast in a Bloomberg survey and followed a 252,000 increase in November that was stronger than previously estimated, a Labor Department report showed Friday. The median forecast in a Bloomberg survey called for a 200,000 advance.
In Europe, the Stoxx Europe 600 Index declined for a third day after swinging between gains and losses all day. The gauge is down 6.7 percent for the week, the worst performance since August 2011.
The People’s Bank of China set the yuan’s daily fixing at 6.5636 per dollar. That’s 0.02 percent stronger than the previous day’s reference rate and ends an eight-day reduction of 1.42 percent. The securities market regulator abandoned the circuit breaker after plunges of 7 percent in the CSI 300 triggered automatic trading halts on Monday and Thursday in its first week.
The PBOC “may have been surprised at how badly China and global stock markets reacted to yuan depreciation,” said Dennis Tan, a foreign-exchange strategist at Barclays Plc in Singapore. “They may want to keep the yuan stable for a while to help calm the stock market.”
The MSCI Emerging Markets Index added 0.2 percent, after earlier rallying as much as 0.7 percent. Benchmarks in China, South Korea, Thailand and Hungary gained at least 0.7 percent. Russian markets remained closed for holidays.
The CSI 300 Index of large-cap companies in Shanghai and Shenzhen advanced 2 percent and the Hang Seng China Enterprises Index climbed 1.1 percent from a four-year low.
The South African rand and Chilean peso led declines in emerging-market currencies against the U.S. dollar, losing more than 0.8 percent. India’s rupee and Brazil’s real strengthened, advancing at least 0.4 percent.
The Bloomberg Dollar Index rose, after earlier touching the highest in more than a decade. The greenback rose 0.1 percent to $1.0922 per euro and was little changed at 117.57 yen.
The euro fell after German industrial production unexpectedly dropped in November. Output, adjusted for seasonal swings and inflation, slid 0.3 percent from October, data from the Economy Ministry in Berlin showed.
U.S. Treasury 10-year notes advanced for the seventh day, with yields falling three basis points to 2.12 percent. Bond traders focused on weaker-than-expected average hourly earnings in the U.S. labor report, evidence that employment strength isn’t generating quicker inflation.
Treasuries posted a weekly gain amid dimmed confidence in riskier assets such as stocks.
Oil slid 1.1 percent to $32.92 a barrel after falling yesterday to the lowest level since December 2003. Contracts on Brent crude dropped 1.2 percent to $33.34 in London.
Gold declined 0.5 percent to $1,103.30 an ounce, paring a weekly advance to 4 percent.
– With assistance from Neil Denslow, Emma O’Brien, Anna Kitanaka, Joseph Ciolli and Dani Burger.