NEW YORK: The U.S. Treasury note’s 10-year yield slid to a record Wednesday while stocks tumbled and the euro weakened to a two-year low as Spain struggled to recapitalize its banks, concern grew about Greece’s future in the euro and American home sales declined. Italian and Spanish bonds tumbled.
Ten-year U.S. note yields lost as much as 0.13 percent to 1.6153 percent. The Standard & Poor’s 500 index slid 1.4 percent to close at 1,313.32.
The euro sank 1.1 percent to $1.2368. The 10-year Italian yield jumped 0.17 points and Spanish 10-year rates rose to a euro-era record. Two-year German yields touched zero for the first time. An S&P commodities gauge fell 2.3 percent as oil prices sank below $88 a barrel.
Concern about Europe’s debt crisis deepened after Italy failed to meet its maximum target at a debt sale, costs to protect Spanish government bonds with what are called default swaps climbed to an all-time high, and a Greek poll showed support for anti-austerity parties.
In the U.S., the National Association of Realtors said the index of pending home resales dropped 5.5 percent in April from the prior month.
“You have a market that’s largely being driven by fear,” said David Coard, head of fixed-income trading in New York at Williams Capital Group, a brokerage for institutional investors. “The U.S. will continue to be the primary recipient of the safe-haven bid. People are clearly more confident in Treasuries. We still have the most liquid, capital markets.”
The 10-year Treasury yield, which is a benchmark for everything from mortgages to corporate bonds, fell in each of the nine weeks through May 18, the longest stretch since 1998. The 30-year U.S. bond yield dropped 0.14 points to 2.71 percent, the lowest level since October. Seven-year notes reached a record low 1.05 percent.
The S&P 500 slid the most since May 17 and erased Tuesday’s 1.1 percent rally as energy, financial and industrial companies led losses in all 10 main industry groups. Caterpillar Inc., Chevron Corp., Alcoa Inc., Exxon Mobil Corp. and Bank of America Corp. lost more than 2.5 percent for the biggest declines in the Dow Jones industrial average, which sank 160.83 points to 12,419.86.
A gauge of home builders in S&P indexes tumbled 4.9 percent after rallying for six straight days, its longest streak in almost a year.
Research In Motion Ltd. slid 7.1 percent to lead Canadian stocks lower as the maker of the BlackBerry smart phone forecast a surprise operating loss for the first quarter and hired banks to advise on strategic options.
Crude oil for July delivery decreased 3.2 percent to $87.84 a barrel and touched a seven-month low of $87.82, the lowest settlement since Oct. 21. Prices are down 16 percent this month, the biggest drop since December 2008. A report today could show U.S. stockpiles climbed to the highest level since 1990. Brent crude dropped below $105 a barrel in London for the first time this year.
Copper slipped 2.1 percent to $3.39 a pound in New York, its lowest settlement price of the year.
The euro fell to as low as $1.2362, the weakest since July 1, 2010, and slid 1.6 percent versus the yen for its seventh consecutive decline. The shared currency weakened against 10 of 16 major peers, while the dollar strengthened against all 16 except the yen.