Global bonds rout hits equities, US markets fall again

By Oliver Renick

money(Bloomberg) — U.S. stocks fell for a second day, joining a retreat in global shares after a rout in fixed-income markets spread to equities.

DuPont Co. and Dow Chemical Co. fell as raw-materials dropped. Semiconductors led a decline in technology shares as Intel Corp. lost 1.4 percent. Verizon Communications Inc. slipped after agreeing to buy AOL Inc. in a deal valued at $4.4 billion. AOL jumped 18 percent. Transocean Ltd. and Noble Corp. gained more than 2.6 percent to pace an advance in energy amid oil’s rebound.

The Standard & Poor’s 500 Index fell 0.3 percent to 2,099.12 at 4 p.m. in New York. The gauge all but erased a 0.9 percent slide as the 10-year Treasury note yield retreated from the highest level since November. The Dow Jones Industrial Average slipped 36.94 points, or 0.2 percent, to 18,068.23. The Nasdaq Composite Index lost 0.4 percent.

“When you have stocks at the high end of the historical range you need better news than what we have,” said Matt Maley, an equity strategist at Miller Tabak & Co. in Newton, Massachusetts. “This rise in rates isn’t coming from a better economy or a fundamental reason.”

A global fixed-income rout is spreading to other markets as the European Central Bank’s quantitative easing helps push global debt valuations to extreme levels while traders grow more confident that the Federal Reserve will delay raising interest rates until later this year to allow for the economic recovery to gain momentum.

Although the timing is uncertain, the Fed’s first rate increase since 2006 will usher in a “regime shift” that will stir financial markets when it occurs, said New York Fed President William C. Dudley on Tuesday.

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