By Sue Chang and Ellie Ismailidou, MarketWatch

Haven assets like gold and the yen surge

The S&P 500 surrendered most of its gains for the year on Thursday as stocks retreated on a combination of tumbling oil prices and a steep drop in the dollar against the yen as investors shunned risky assets.

The S&P 500 fell 18 points, or 0.9%, to 2,047 with all 10 sectors in the red. The large-cap index is up 0.2% for year.

The Dow Jones Industrial Average dropped 125 points, or 0.7%, to 17,593, led by a 2.5% drop in shares of Verizon Communications Inc.(VZ). The Nasdaq Composite declined 46 points, or 0.9%, to 4,874.

A healthy report on weekly U.S. jobless claims (http://www.marketwatch.com/story/us-jobless-claims-fall-9000-to-26700-2016-04-07) failed to calm the jitters in the market. Investors are still assessing the minutes of the Federal Open Market Committee's March meeting (http://www.marketwatch.com/story/sentiment-on-fed-running-against-april-rate-hike-minutes-show-2016-04-06), released Wednesday, which dampened the prospects for an April interest rate increase.

"The market appears to be pivoting on oil prices and a strengthening yen; both of which are consistent with global slowing," said Jack Ablin, chief investment officer at BMO Private Bank.

Quincy Krosby, market strategist at Prudential Financial, said the market is also coming to terms with the realization that "central banks' are losing their potency, and that is underpinning existing concerns over global growth."

Fear-driven trade: The prospect of a dovish Federal Reserve, added to the belief the Bank of Japan will not intervene to support its currency, sent the dollar (http://www.marketwatch.com/story/dollar-slides-to-fresh-18-month-low-vs-yen-as-market-bets-on-no-boj-intervention-2016-04-07) to its lowest level against the yen in nearly 18 months.

Since the beginning of the year, the dollar has shed more than 10% of its value against the Japanese currency. Concerns about global economic growth have ratcheted up investors' appetite for haven assets such as the yen and gold. At the same time, expectations of a slowdown in U.S. interest-rate hikes have sapped demand for the buck.

The soaring yen on Thursday was "a head-scratcher for equity investors," as it indicated that global investors are hedging against risk, said Kim Forrest, senior portfolio manager at Fort Pitt Capital.

This gives out "a perception of fear in the market," which in turn sparked selling in the stock market, Forrest added.

Gold prices surged 1.1%, to $1,237 an ounce.

Oil direction: A fresh drop in oil prices also dented the appetite for risky assets, as investors weighed a fall in crude inventories (http://www.marketwatch.com/story/oil-prices-surge-on-fresh-hopes-for-a-production-freeze-2016-04-06) against fading hopes that a meeting of oil producers will lead to a curb on output.

"We remain at the mercy of the oil market, and decisions on freezing or cutting [oil production] on April 17 in Doha will likely set the tone for equity markets too," said Brenda Kelly, head analyst at London Capital Group, in emailed comments.

Bumpy path: Some analysts noted a pickup in stock-market volatility in the last few sessions, after an unusually long period of calm. The S&P was down nearly 1% on Thursday, after rallying more than 1% on Wednesday, which followed a 1% loss on Tuesday.

Such swings sound "pretty innocuous in and of itself. And while it ultimately may be a blip on the index's still upward-sloping trend, it's something that hasn't occurred since Feb. 12," said Frank Cappelleri, technical analyst at Instinet, in emailed comments.

Data docket: The level of jobless claims (http://www.marketwatch.com/story/us-jobless-claims-fall-9000-to-26700-2016-04-07) last week was "very benign, but may be bottoming out after quite a multiyear fall from the peak in March 2009," said Peter Boockvar, chief market analyst at The Lindsey Group, in emailed comments after the report's release.

A reading on consumer credit for February is due at 3 p.m. Eastern.

Federal Reserve Chairwoman Janet Yellen will hold conversations with her predecessors Ben Bernanke, Alan Greenspan and Paul Volcker in New York City at 5:30 p.m. Eastern. Kansas City Fed President Esther George will speak on the economy in York, Neb., at 8:15 p.m. Eastern.

Stocks to watch: Valeant Pharmaceuticals International Inc. (VRX.T) gained 4.4% after it secured a commitment from loan holders, which will buy the drugmaker time (http://www.marketwatch.com/story/valeant-convinces-loan-holders-to-loosen-financial-terms-2016-04-07) as it attempts to resuscitate its business.

Bed Bath & Beyond (BBBY) shares were up 2.4% after the retailer released quarterly earnings and announced its first quarterly dividend (http://www.marketwatch.com/story/bed-bath-beyond-surges-on-earnings-first-ever-quarterly-dividend-2016-04-06).

ConAgra Foods Inc. (CAG) gained 2.3% after the food maker's quarterly results beat profit and sales expectations (http://www.marketwatch.com/story/conagra-beats-profit-and-sales-expectations-2016-04-07).

Rite Aid Corp. (RAD) fell 0.5% as the retailer topped the Street's view on profit but missed on sales (http://www.marketwatch.com/story/rite-aid-beats-profit-expectations-but-misses-on-sales-2016-04-07).

L Brands Inc.'s (LB) Victoria's Secret announced layoffs as part of a restructuring that will also cut some of its merchandise categories. L Brands shares were down 1.3%.

Sprint Corp. (S) tumbled 3.1% after the company said late Wednesday it reached a deal (http://www.marketwatch.com/story/sprint-reaches-deal-to-sell-and-lease-back-assets-to-raise-22-billion-2016-04-06) with several bankrupt entities to sell and then lease back network assets which will then be used as collateral to raise $2.2 billion.

Other markets: The Stoxx Europe 600 ended lower, amid concerns over global growth. Minutes from the European Central Bank's last meeting showed policy makers didn't rule out further rate cuts (http://www.marketwatch.com/story/ecb-minutes-show-more-rate-cuts-possible-2016-04-07).

In Asia, the Nikkei 225 index closed slightly highe (http://www.marketwatch.com/story/china-stocks-fall-as-3-month-ban-on-selling-stocks-set-to-expire-2016-04-07)r, while the Shanghai Composite Index slid 1.4%.

--Barbara Kollmeyer contributed to this report.

 

(END) Dow Jones Newswires

April 07, 2016 13:40 ET (17:40 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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