Stock rally fizzles as traders waver after euphoria; oil tumbles

The rally in global equities sputtered as traders grew more skeptical about the efficacy of central bank stimulus amid mixed economic data. Oil tumbled.

Stocks halted a four-day advance as Apple Inc. dragged down the S&P 500 Index on speculation of lower iPhone 7 sales outside the U.S. Oil sank after Saudi Arabia was said to dismiss the prospects for an output deal to stabilize the market in talks next week. Longer-dated Treasuries posted their best week since July as markets readjusted their view to a slower pace of rate hikes by the Federal Reserve. The dollar rose against major peers, while the pound slid as British foreign secretary Boris Johnson boosted concern that the U.K. is heading for a swift exit from the European Union.

Stocks, bonds and commodities advanced this week on signals that central banks will keep their accommodative policies. Still, traders became more hesitant to keep piling into assets on Friday amid uncertainties about the global recovery. Dallas Fed President Robert Kaplan said the monetary authority “can afford to be patient in removing accommodation,” while his counterpart in Boston, Eric Rosengren, said the failure to get back to a strategy of gradual rate increases may threaten the economic rebound.

“Today is the inevitable pause because the last two days saw a pretty significant move, particularly in light of a Fed that did what the market was expecting,” said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. in Milwaukee. “The bulk of the price action — you’ve got bonds selling off a little bit, you’ve got crude oil selling off, the dollar rallying a little bit — it’s what you’d expect from a pause in a rally.”

With central banks moving off center stage, investors will turn their attention to the first of three U.S. presidential debates on Monday ahead of the Nov. 8 vote. Republican candidate Donald Trump has been locked in a fierce election battle for months with rival Hillary Clinton. While he has sharply narrowed her lead both nationally and in several battleground states according to recent polls, handicappers still give the Democratic candidate the edge in winning the electoral votes needed to clinch the office.