U.S. stocks fell the most in a month and bond yields rose as investors evaluated the resilience of the global recovery amid concerns about the delta virus strain and risks from China.

The 0.9 per cent drop in the S&P 500 came amid the quarterly expiration of options and futures on Friday, which can trigger volatility. The materials, utilities and technology sectors pushed the benchmark index into the red for a second day, erasing gains from earlier in the week. The index dipped below its 50-day moving average, a key technical level that has provided support during previous market selloffs this year. The tech-heavy Nasdaq 100 slumped 1.2 per cent, the biggest drop since May. Casinos extended declines amid tightening restrictions in Macau, while miners led a drop in Europe’s Stoxx 600 Index as iron ore slumped toward US$100 a ton. 

“September is starting off in typical fashion, with stocks struggling to maintain optimism in the face of a likely pending shift in Fed policy, slower growth and uncomfortably high inflation,” Bloomberg Intelligence’s Gina Martin Adams wrote in a note.  

The University of Michigan’s preliminary sentiment index showed U.S. consumer sentiment rose slightly in early September but remained close to a near-decade low, while buying conditions deteriorated to their worst since 1980 because of high prices.

Asian equities were mixed amid the debt crisis at China Evergrande Group and a short-term cash injection by the central bank to help soothe nerves. 

“We’re not necessarily in a period of a lot of negative catalysts, we’re in a period of a lack of positive catalysts,” said Randy Frederick, managing director of trading and derivatives with the Schwab Center for Financial Research. “And we may not get a huge amount of upside momentum until we get something positive like potentially earnings, which is still a couple of weeks out.”

Global equities posted a second weekly drop, restrained by the impact of the delta variant on economic reopening, the implications of elevated inflation and the upheavals in China. The Federal Reserve will probably hint at its meeting next week that it’s moving toward scaling back monthly asset purchases and make a formal announcement in November, according a Bloomberg survey of economists.

Meanwhile, European Central Bank Governing Council member Martins Kazaks said in a Bloomberg interview that the euro area’s inflation outlook may turn out higher than currently anticipated if the coronavirus doesn’t inflict any further shocks.   

Oil slipped, while gold advanced. An index of commodity prices dipped, but remains in sight of a record hit in 2011, underscoring the inflation concerns rippling across the world economy.  

Some of the main moves in markets: 

STOCKS

• The S&P 500 fell 0.9 per cent as of 4:05 p.m. New York time
• The Nasdaq 100 fell 1.2 per cent
• The Dow Jones Industrial Average fell 0.5 per cent
• The MSCI World index fell 0.7 per cent

CURRENCIES

• The Bloomberg Dollar Spot Index rose 0.3 per cent
• The euro fell 0.3 per cent to US$1.1730
• The British pound fell 0.4 per cent to US$1.3737
• The Japanese yen fell 0.2 per cent to 109.95 per dollar

BONDS

• The yield on 10-year Treasuries advanced three basis points to 1.37 per cent
• Germany’s 10-year yield advanced two basis points to -0.28 per cent
• Britain’s 10-year yield advanced three basis points to 0.85 per cent

COMMODITIES

• West Texas Intermediate crude fell 0.9 per cent to US$71.98 a barrel
• Gold futures fell 0.3 per cent to US$1,752.10 an ounce