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| Version 1 | Version 2 |
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| Stock Markets Drop, Extending Sell-Off | Stock Markets Drop, Extending Sell-Off |
| (35 minutes later) | |
| Good news on the global economy continued to flummox investors on Monday, as markets around the world slumped and bond investors pushed interest rates higher. | Good news on the global economy continued to flummox investors on Monday, as markets around the world slumped and bond investors pushed interest rates higher. |
| Stocks in the United States slipped again, extending a sell-off that has investors worried that a nine-year bull market may be hitting a rough spot. | Stocks in the United States slipped again, extending a sell-off that has investors worried that a nine-year bull market may be hitting a rough spot. |
| The Standard & Poor’s 500-stock index dropped by as much as 0.9 percent not long after trading began, but within about an hour had regained ground to cut its loss. The broad index is down 2 percent in February. Last week, stocks had their worst performance in two years. | |
| If the momentary sputter in stocks turns into something worse, it could become awkward for President Trump. He has repeatedly claimed credit for the surging stock market, and gave the markets a high-profile mention at his State of the Union address last week. At its recent peak, the S. & P. 500 was up 27 percent since Mr. Trump took office. But that number has slipped with the recent sell-off to roughly 22 percent. | |
| And the weakness on display in the United States last week set a tone for the open of trading in foreign markets. Japan’s Nikkei 225 dropped by 2.6 percent on Monday. Benchmark equity indexes in France, Italy and Spain all fell by more than 1 percent. | And the weakness on display in the United States last week set a tone for the open of trading in foreign markets. Japan’s Nikkei 225 dropped by 2.6 percent on Monday. Benchmark equity indexes in France, Italy and Spain all fell by more than 1 percent. |
| Bond markets, too, were soft. The yield on the 10-year U.S. Treasury — a cornerstone of the interest rates that matter to consumers, like those for mortgages — remained above 2.8 percent on Monday. | Bond markets, too, were soft. The yield on the 10-year U.S. Treasury — a cornerstone of the interest rates that matter to consumers, like those for mortgages — remained above 2.8 percent on Monday. |
| Treasury yields have moved sharply higher in recent weeks, as a broad global economic expansion and incipient signs of upward pressure on wages in the United States. Investors appear concerned that inflationary pressure could push central banks to move quickly to remove support for their economies. | Treasury yields have moved sharply higher in recent weeks, as a broad global economic expansion and incipient signs of upward pressure on wages in the United States. Investors appear concerned that inflationary pressure could push central banks to move quickly to remove support for their economies. |
| That support, which has included keeping short-term interest rates low and taking extraordinary measures to push longer-term interest rates lower, has been seen as the fuel behind the long bull market for stocks. | That support, which has included keeping short-term interest rates low and taking extraordinary measures to push longer-term interest rates lower, has been seen as the fuel behind the long bull market for stocks. |
| “We think there is growing concern about the inexorable rise getting out of hand,” Morgan Stanley stock market analysts wrote in a note on Monday. | “We think there is growing concern about the inexorable rise getting out of hand,” Morgan Stanley stock market analysts wrote in a note on Monday. |
| A sharp rise in bond yields could be a cause for concern about the economy. Yields on government bonds like United States Treasury bonds are effectively the price that governments pay to borrow from global investors. The yields provide a baseline for determining the costs of borrowing for entities ranging from large corporations to first-time home buyers. | A sharp rise in bond yields could be a cause for concern about the economy. Yields on government bonds like United States Treasury bonds are effectively the price that governments pay to borrow from global investors. The yields provide a baseline for determining the costs of borrowing for entities ranging from large corporations to first-time home buyers. |
| On the other hand, there are good reasons for yields to be climbing. Bond yields typically move higher during times of robust economic growth, and the world’s large economies are now growing the first time since the financial crisis hit nearly a decade ago. | On the other hand, there are good reasons for yields to be climbing. Bond yields typically move higher during times of robust economic growth, and the world’s large economies are now growing the first time since the financial crisis hit nearly a decade ago. |
| On Monday, an index of eurozone purchasing manager activity, considered a good gauge of economic growth, hit a 12-year high, suggesting that the surprisingly strong European economy has further room to expand. Last year, the monetary bloc grew at its fastest annual pace in a decade. | On Monday, an index of eurozone purchasing manager activity, considered a good gauge of economic growth, hit a 12-year high, suggesting that the surprisingly strong European economy has further room to expand. Last year, the monetary bloc grew at its fastest annual pace in a decade. |