US stocks pull back as bitcoin, gold score record highs

By Stephen Culp

NEW YORK (Reuters) -Equity investors in the United States and Europe showed caution on Tuesday while bitcoin and gold touched all-time highs as market participants eyed upcoming economic data and central bank actions.

All three major U.S. stock indexes followed their European counterparts lower in anticipation of the February jobs report due on Friday as well as Fed Chair Jerome Powell’s two-day congressional testimony expected to begin on Wednesday.

“Markets tend to get more focused on economic data when you’re outside the primary earnings season,” said Chuck Carlson, CEO at Horizon Investment Services in Hammond, Indiana. “It’s a lack of other news, and it’s a market that’s vulnerable to profit taking.”

Despite the risk-averse sentiment among stock investors, bitcoin touched, and then backed away from, a record high.

Gold also reached an all-time high, powered by interest rate cut expectations.

You’ve had this big run in stocks, and investors are looking to put their money into some other areas where they think they can generate some cash,” Carlson added.

Economic data showed a waning expansion of the U.S. services sector, and a steeper-than expected drop in new factory orders.

The Dow Jones Industrial Average fell 240.51 points, or 0.62%, to 38,749.32, the S&P 500 lost 46.85 points, or 0.91%, to 5,084.1 and the Nasdaq Composite dropped 296.70 points, or 1.83%, to 15,910.81.

European shares dipped after moves by China to stimulate its economy failed to impress investors, who grew cautious ahead of euro zone and U.S. economic data.

The pan-European STOXX 600 index lost 0.30% and MSCI’s gauge of stocks across the globe shed 0.70%.

Emerging market stocks lost 0.79%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.87% lower, while Japan’s Nikkei lost 0.03%.

The dollar softened against a basket of world currencies after the weaker than expected U.S. economic data.

The dollar index fell 0.16%, with the euro up 0.15% to $1.087.

The Japanese yen strengthened 0.39% versus the greenback to 149.95 per dollar, while Sterling was last trading at $1.2727, up 0.29% on the day.

Benchmark 10-year U.S. Treasury yields fell to a one-month low in following the softer-than-expected services sector data as investors prepared for Friday’s employment report.

Benchmark 10-year notes last rose 21/32 in price to yield 4.1389%, from 4.219% late on Monday.

The 30-year bond last rose 41/32 in price to yield 4.2787%, from 4.355% late on Monday.

Oil prices softened as skepticism over China’s economic growth plan offset supply pressures due to the decision by OPEC+ to continue capping production.

U.S. crude rose 0.5% to $79.13 per barrel and Brent was last at $82.38, down 0.51% on the day.

Gold touched an all-time high as market participants solidified their bets that the Fed will begin lowering its key policy rate in June.

Spot gold added 0.6% to $2,127.89 an ounce.

(Reporting by Stephen Culp; editing by Jonathan Oatis)