Stocks, Commodities Fall Further as Investors Dial Back on Risk

By Riva Gold and Amrith Ramkumar Features Dow Jones Newswires

U.S. stocks extend recent declines

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-- Crude futures, industrial metals drop

-- Dollar, bond yields lower

Stocks and commodities extended declines Wednesday as investors dialed back on riskier assets.

Investors have enjoyed a broad run-up in markets around the world this year that has sent major stock indexes to records and prices of oil and raw materials to multiyear highs. Declines are natural after such a strong rally and the peak of earnings season, some investors and analysts said.

"We're just due for some kind of a slowdown," said Bob Phillips, managing principal at Spectrum Management Group. "I don't think there's anything in the cards that suggests this is going to turn into a major pullback or correction."

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The Dow Jones Industrial Average was recently down 122 points, or 0.5%, at 23288, slightly paring losses after falling as many as 167 points earlier. The S&P 500 fell 0.4% after posting its lowest close this month on Tuesday, and the Nasdaq Composite declined 0.4%. The Dow industrials and S&P 500 were on track for their fourth day of declines in the past five sessions.

Although falling commodity prices and doubts about a tax overhaul have weighed on major indexes recently, Steven Chiavarone, assistant vice president and portfolio manager at Federated Investors, said the earnings and economic backdrop for stocks is still favorable moving forward.

"It's hard for us not to continue to be in buy-the-dip mode here," he said.

Stocks have tended to rebound quickly from declines this year, with many investors taking pullbacks as an opportunity to buy into a market that has risen steadily this year.

U.S. crude fell 0.7% to $55.33 a barrel, extending this week's losses, after data from the U.S. Energy Information Administration showed an unexpected increase in crude oil stockpiles. The S&P 500 energy sector declined 1%.

Prices of copper and other industrial metals also continued falling after data earlier this week showed Chinese industrial output and fixed-asset investment growth slowed in October. China is the world's largest metals consumer.

Treasury yields held on to losses after data showed U.S. consumer prices rose only slightly in October, a sign that stubbornly soft inflation is persisting.

The yield on the 10-year U.S. Treasury note fell to 2.335%, according to Tradeweb, from 2.381% Tuesday. Yields fall as bond prices rise.

Corporate news also drove swings in individual stocks Wednesday.

Shares of Target fell more than 8% after the discount retailer posted higher quarterly sales but said profits fell and gave a disappointing earnings outlook for the holiday period. Competitor Wal-Mart Stores is scheduled to report before the market opens Thursday.

Elsewhere, the Stoxx Europe 600 notched a seventh straight day of losses, dropping 0.5% Wednesday to its lowest level in almost two months. European earnings have lagged behind other regions this quarter, in a move analysts largely attribute to this year's strength in the euro.

"I think what we're really seeing is a punishment of any European stock missing earnings," said Edward Park, investment director at Brooks Macdonald in London. "Given where valuations are, it's a healthy reaction by markets," he said.

Japan's Nikkei Stock Average shed 1.6% in its biggest daily fall since March. Hong Kong's Hang Seng declined 1%.

Write to Riva Gold at riva.gold@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

November 15, 2017 15:12 ET (20:12 GMT)