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Wall Street stocks post biggest drop in a month

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Bond yields rise as rate cut prospects fade

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US dollar slips; Crude settles modestly higher

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Gold pulls back from 3-week high

(Updates prices after US stock market close)

By Sinéad Carew and Marc Jones

NEW YORK/LONDON, Nov 13 (Reuters) - Wall Street indexes

suffered their biggest one-day decline in a month on Thursday,

pushing down MSCI's global equities gauge while U.S. Treasury

yields rose as investor bets for a December rate cut took a dive

after hawkish comments by Federal Reserve officials.

In currencies, the dollar fell despite the prospects for slower

rate cuts, in the first trading day after the House of

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

government from its longest shutdown in history and President

Donald Trump signed the bill.

Investors had been pouring into equities in recent sessions in

anticipation of an end to the 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. The White House

indicated that the U.S. unemployment rate for October may never

be available, since it is dependent on a household survey that

was not conducted during the shutdown.

And pointing to worries about high inflation after two U.S.

interest rate cuts this year, a growing number of Federal

Reserve policymakers signaled caution about further rate cuts.

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

reiterated his view that there was 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.

Minneapolis Federal Reserve President Neel Kashkari said

inflation was too high 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 now balanced after two rate cuts already this year.

Trader bets for a December rate cut were last showing a 51.9%

probability, down 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 prospects

for 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 investors are looking at high valuations in heavyweight

technology and artificial intelligence-linked stocks, adding to

their worries about a continued lack of clarity around the U.S.

economy. So, 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."

EQUITIES MARK BIGGEST DROP IN A MONTH

On Wall Street, the technology-heavy Nasdaq Composite

led losses, closing down 536.10 points, or 2.29%, at 22,870.36.

The Dow Jones Industrial Average fell 797.60 points, or

1.65%, to 47,457.22, while the S&P 500 fell 113.43

points, or 1.66%, to 6,737.49. All three indexes registered

their biggest daily declines since October 10.

MSCI's gauge of stocks across the globe was

down 12.07 points, or 1.19%, at 999.71, which would also be its

biggest daily drop since October 10.

Earlier in the day, the pan-European STOXX 600 index

closed down 0.61% while Europe's broad FTSEurofirst 300 index

finished off 0.66%. Both had hit record highs during

their trading day.

In U.S. Treasuries, prices retreated, driving 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 4.4

basis points to 4.123%, from 4.079% late on Wednesday while the

30-year bond yield rose 5.4 basis points to

4.7162%. The 2-year note yield, which typically moves

in step with interest rate expectations for the Federal Reserve,

rose 3.1 basis points to 3.597%.

DOLLAR FALLS AGAINST EURO, YEN

In currencies, the U.S. dollar dipped as the government

reopened, leaving traders grappling with the long-term impact of

the shutdown on trust in the U.S. currency while investors

waited for data on the health of the economy.

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.

"The shutdown is over, but how soon are we going to go back to

normal? How soon are we going to have numbers? How soon am I

going to be able to do real, accurate analysis based on trusted

American statistics from September and October? That's in

doubt," said Juan Perez, director of trading at Monex USA in

Washington.

The dollar index, which measures the greenback against a

basket of currencies including the yen and the euro, fell 0.29%

to 99.19, with the euro up 0.34% at $1.1631. Against the

Japanese yen, the dollar weakened 0.12% to154.58.

In cryptocurrencies, bitcoin was down 3.24% at

$98,578.10, after falling to its lowest level since May.

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 selloff that

followed the reopening of the U.S. government.

Spot gold fell 0.51% to $4,177.21 an ounce. U.S. gold

futures fell 0.96% to $4,164.10 an ounce.