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Wall Street stocks fall with bond prices as rate cut

prospects

fade

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US dollar slips while Treasury yields rise

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Crude settles modestly higher, gold pulls back from 3-week

high

(Updates prices to late afternoon)

By Sinéad Carew and Marc Jones

NEW YORK/LONDON, Nov 13 (Reuters) - A steep sell-off on

Wall Street dragged MSCI's global equities gauge lower on

Thursday while U.S. Treasury yields rose, as investor hopes for

a Federal Reserve rate cut in December faded after a chorus of

hawkish comments from central bank officials.

In currencies, the dollar also fell despite the hawkish

statements from multiple Fed officials, after the House of

Representatives voted to reopen the U.S. government late on

Wednesday and President Donald Trump signed the bill.

Investors had been buying equities in recent sessions in

anticipation of a U.S. government reopening after a record

43-day shutdown, which disrupted food benefits for millions,

left hundreds of thousands of federal workers unpaid, and

snarled air traffic while putting a pause on crucial economic

data releases.

However, Trump administration officials dashed hopes for a

clearer view of the U.S. economy any time soon.

White House economic adviser Kevin Hassett told Fox News

that, while the government will have a jobs number, data on the

U.S. unemployment rate for October may never be available

because it is dependent on a household survey that was not

conducted during the shutdown.

And multiple Fed officials threw cold water on the idea that the

central bank would cut rates in December.

Alberto Musalem, who runs the St Louis Federal Reserve Bank,

on Thursday reiterated his view that policy is closer to neutral

than to modestly restrictive, leaving limited room to ease

further without becoming overly accommodative.

Federal Reserve Bank of Cleveland President Beth Hammack

said interest rate policy should remain restrictive in order to

put downward pressure on still concerning levels of inflation.

And Minneapolis Federal Reserve President Neel Kashkari said

he sees mixed signals from the economy. Inflation, running

around 3%, was too high, he said, while parts of the labor

market "look like they're under pressure."

Earlier, San Francisco Federal Reserve President Mary Daly said

the risks to the Fed's two goals are balanced now that it has

cut interest rates twice this year. She added that services

inflation has not been declining at a steady rate and that there

was more concern that labor demand will continue to slow.

All this sent trader bets on a December rate cut tumbling to

a 49.6% probability from 62.9% on Wednesday, according to CME

Group's FedWatch tool.

"Markets were counting on a cut, and we may not get it,"

said Bob Doll, chief executive and chief investment officer at

Crossmark, pointing to cautious Fed comments on the idea of a

December easing of rates. "Most of them are putting up warning

signs that it's not a 'gimme', just like the Fed Chair told us

when he did this presser after the last Fed meeting. In some

sense, it's not new, but people didn't believe it."

Anthony Saglimbene, chief market strategist at Ameriprise,

said that, along with fading hopes for rate cuts, investors were

worried about a continued lack of clarity about the health of

the U.S. economy.

"What you're seeing today is a risk-off assessment. We're

still going to get a cloudy picture on economic data,"

Saglimbene said.

And with the market already showing signs of concern about

high valuations in heavyweight technology and artificial

intelligence-linked stocks, he said it was not surprising to

"see investors take a step back from risk, sell down the winners

and go into the defensive areas of the market".

As of 2:45 p.m. on Wall Street, the Dow Jones Industrial

Average fell 708.88 points, or 1.47%, to 47,545.04, the

S&P 500 fell 108.91 points, or 1.59%, to 6,741.94 and the

Nasdaq Composite fell 537.47 points, or 2.30%, to

22,869.43.

MSCI's gauge of stocks across the globe

fell 11.50 points, or 1.14%, to 1,000.28.

EUROPEAN INDEXES CLOSE LOWER AFTER HITTING RECORDS

The pan-European STOXX 600 index closed down 0.61%

after hitting a record high earlier, while Europe's broad

FTSEurofirst 300 index finished off 0.66%.

In U.S. Treasuries, prices were down, pushing yields higher, as

investors scaled back expectations for imminent rate cuts amid

lingering uncertainty over the inflation outlook and stark

divisions among Fed policymakers on the trajectory of the U.S.

economy and monetary policy.

The yield on benchmark U.S. 10-year notes rose 2.7

basis points to 4.106%, from 4.079% late on Wednesday, while the

30-year bond yield rose 3.7 basis points to

4.6986%. The 2-year note yield, which typically moves

in step with interest rate expectations for the Federal Reserve,

rose 1.9 basis points to 3.585%.

Meanwhile, European financial stability officials were debating

whether to create an alternative to Federal Reserve funding

backstops by pooling dollars held by non-U.S. central banks,

aiming to reduce their reliance on the U.S. under the Trump

administration, five officials familiar with the matter told

Reuters.

This helped to send the dollar index, which measures the

greenback against a basket of currencies including the yen and

the euro, down 0.36% to 99.12.

The euro was up 0.41% at $1.164. Against the Japanese yen

, the dollar weakened 0.23% to 154.42.

In energy markets, oil futures settled slightly higher after

selling off sharply in the previous session, as investors

weighed concerns about global oversupply against looming

sanctions against Russia's Lukoil.

U.S. crude settled up 0.34%, or 20 cents, at $58.69 a

barrel while Brent settled at $63.01 per barrel, up

0.48%, or 30 cents, on the day.

Gold prices pulled back after hitting a three-week high

earlier in the session, amid the broad market sell-off following

the reopening of the U.S. government.

Spot gold fell 0.7% to $4,169.10 an ounce. U.S. gold

futures fell 0.13% to $4,199.00 an ounce.