(Updates prices to U.S. afternoon trading)
* Equities decline with Nasdaq leading losses
* Tech stocks tumble, defensive sectors find favor
* Oil prices fall with Middle East outlook unclear; EIA
flags demand drop
By Sinéad Carew and Amanda Cooper
NEW YORK/LONDON, June 9 (Reuters) - MSCI's global equities
gauge lost ground on Tuesday as heavyweight U.S. technology
stocks stumbled and investors opted for safer bets, while oil
prices fell as updates from the Middle East brought little
clarity on progress towards peace.
On Monday, Iran and Israel had boosted hopes that tensions would
ease as they said they would stop attacking each other. But U.S.
President Donald Trump said on Tuesday that Iran had shot down a
U.S. Apache helicopter that was patrolling the Strait of Hormuz
overnight and vowed to respond, without providing details.
This was after Israel attacked the historic port city of
Tyre in southern Lebanon on Tuesday, killing at least eight
people. Tehran had warned on Monday that it would resume
hostilities if Israel continued to attack its ally Hezbollah in
Lebanon.
Meanwhile, the U.S. Energy Information Administration said oil
stockpiles in the world's largest economies were headed towards
their lowest levels since at least 2003. The EIA also said it
expects global oil demand to decline in 2026, reversing its
earlier forecast for an increase.
In equities, Wall Street's main indexes lost ground as the
session wore on, with the S&P 500's heavyweight technology
sector falling sharply. Sahak Manuelian, managing
director for global equities trading at Wedbush Securities, said
investors were selling technology stocks and rotating into more
defensive sectors such as real estate, utilities
and healthcare.
"Today we tried to rally early and it was very, very
short-lived," said Manuelian, adding investors were shedding
stocks that had gained a lot and preparing for the highly
anticipated market debut of Elon Musk's SpaceX later this week.
"Investors are looking at their portfolios and seeing how much
tech has moved and then also coming to grips with the SpaceX
IPO, which is scheduled for this Friday, and probably have to
bookmark some dollars for that. They're trying to take some
profits off some of these other things that have run so much in
such a short period of time and probably looking to see where
they can chase alpha in other sectors of the market," he said.
INFLATION AND RATE WORRIES
Another worry is the scheduled release of consumer inflation
data, which is due out on Wednesday, according to Gene Goldman,
chief investment officer at Cetera, who sees inflation concerns
highlighting the Federal Reserve's next interest rate policy
moves.
"There is a lingering bit of caution as investors are a bit
worried about tomorrow's potentially high inflation readings.
Higher-than-expected inflation further brings the Fed to the
forefront as a headline risk," Goldman said.
Since the release on Friday of a stronger-than-expected jobs
report for May, traders have increased bets that the Fed will
hike rates, with the probability for a 25-basis-point increase
by December close to 43% and bets on a 50-basis-point increase
above 20%, up from 12% last week, according to CME Group's
FedWatch tool.
On Wall Street, at 1:49 p.m. ET (1749 GMT), the Dow Jones
Industrial Average fell 125.53 points, or 0.24%, to
50,662.70, the S&P 500 fell 81.16 points, or 1.10%, to
7,324.57 and the Nasdaq Composite fell 539.94 points, or
2.07%, to 25,391.55.
MSCI's gauge of stocks across the globe
fell 4.45 points, or 0.40%, to 1,096.51.
The pan-European STOXX 600 index finished down 0.5%
after rising earlier.
The CBOE volatility index, sometimes referred to as
Wall Street's fear gauge, was last up 1.49 points at 20.37 after
earlier hitting 23.34, which was its highest level since April
7.
In currencies, the dollar index, which measures the
greenback against a basket of currencies including the yen and
the euro, fell 0.12% to 99.92, with the euro up 0.11% at
$1.1547.
Against the Japanese yen, the dollar strengthened
0.08% to 160.3.
In cryptocurrencies, bitcoin fell 2.99% to
$61,576.95. Ethereum declined 2.97% to $1,639.16.
U.S. Treasury yields edged lower as traders waited for May's
consumer inflation report for signs of whether price pressures
are continuing to build.
The yield on benchmark U.S. 10-year notes fell
1.8 basis points to 4.532%, from 4.55% late on Monday. The
30-year bond yield fell 1.5 basis points to 5.0089%.
The 2-year note yield, which typically moves in
step with interest rate expectations for the Federal Reserve,
fell 3.1 basis points to 4.127%, from 4.158% late on Monday.
In energy markets, U.S. crude settled down 3.4%, or
,$3.10, at $88.20 a barrel. Brent was at $91.62 per
barrel, down 2.79% on the day.
In precious metals, gold prices fell, tracking a broader market
selloff on rising expectations of a U.S. interest rate hike this
year, while investor focus turned to the inflation data due
later this week.
Spot gold fell 1.68% to $4,255.99 an ounce while spot
silver fell 4.7% to $64.96 an ounce.