Sector Investing

[ReturntoSender]

Midweek Surge Reversed as Volatility Persists
05-Mar-20 16:20 ET
Dow -969.58 at 26121.28, Nasdaq -279.49 at 8738.60, S&P -106.18 at 3023.94

https://www.briefing.com/stock-market-update

[BRIEFING.COM] A volatile week continued on Thursday as the major averages surrendered the entirety of their big gains from Wednesday, with the S&P 500 (-3.4%) sliding back below its 200-day moving average (3051).

Equities started the day well below yesterday's closing levels as sentiment remained pressured by the continued uncertainty associated with the spread of the coronavirus. The first couple hours of action saw a rebound attempt, which ran out of steam after the S&P 500 briefly climbed above its opening mark.

Treasuries continued charging higher, smashing the 10-yr yield to a fresh record low of 0.899%. The benchmark yield settled lower by seven basis points at 0.93%, reflecting the market's concerns about growth. The fed funds futures market, for its part, is almost certain that the fed funds rate range will be slashed by another 50 basis points on March 18.

These growth concerns, along with a continuation of a negative news flow, kept the market heading southward. Italy reported that the number of deaths among patients diagnosed with the coronavirus increased to 148 from 107 on Wednesday while British Prime Minister, Boris Johnson, has reportedly been advised to expect a significant spread of COVID-19 in the U.K. In the U.S., community spread cases of the coronavirus were reported in New York and San Francisco.

All eleven sectors lost more than 1.0% with seven groups falling 3.0% or more. Financials (-4.9%) and energy (-3.6%) spent the day at the bottom of the leaderboard, considering these groups are highly sensitive to growth. The energy sector received no assistance from crude oil, which fell $0.88, or 1.9%, to $45.89/bbl even though OPEC reportedly agreed to reduce output by 1.5 million barrels per day.

Travel-related stocks endured another ugly day with cruise operators like Royal Caribbean (RCL 65.78, -12.80, -16.3%), Carnival (CCL 27.87, -4.59, -14.1%), and Norwegian Cruise Line Holdings (NCLH 28.59, -4.41, -13.4%) spending the day at the bottom of the S&P 500 leaderboard. These three names are now down about 50% from this year's highs.

Airlines also faced notable selling pressure after Southwest Air (LUV 45.25, -1.68, -3.6%) lowered its Q1 operating revenue guidance by $200-$300 mln. Concerns about others following had Alaska Air (ALK 43.46, -6.23, -12.5%) and American Airlines (AAL 16.04, -2.49, -13.4%) finishing at the bottom of the Dow Jones Transportation Average (-5.3%).

Retailer Kroger (KR 33.47, +2.51, +8.1%) escaped today's carnage, spiking to a level not seen in more than two years after a slight Q4 beat. American Eagle Outfitters (AEO 11.86, -1.01, -7.9%) started in the green after beating quarterly expectations but fell to its lowest level since mid-2017 intraday.

The CBOE Volatility Index (VIX 39.67, +7.68, +24.0%) jumped almost eight points today but stopped shy of reaching its intraday high from Monday (43.77%).

Gold spiked almost 2.0% to trade within $20 of its high from February 24 ($1691.70/ozt).

Reviewing today's economic data:

Nonfarm business sector labor productivity increased 1.2% in the fourth quarter (Briefing.com consensus 1.3%), according to a revised estimate, versus an originally reported 1.4% increase. Unit labor costs were revised down to 0.9% (Briefing.com consensus 1.4%) from 1.4%.
The key takeaway from the revision is that productivity was relatively weak in the fourth quarter, which is a headwind to an increased standard of living.
Factory orders declined 0.5% m/m in January (Briefing.com consensus -0.1%) following an upwardly revised 1.9% increase (from 1.8%) in December. Shipments also declined 0.5% m/m in January after increasing 0.5% in December.
The key takeaway from the report is that it didn't alter the view that business spending was decent in January, evidenced by a 1.1% increase in new orders for nondefense capital goods excluding aircraft, which was unchanged from the Advanced Durable Goods Orders report.
Initial claims for the week ending February 29 were down 3,000 to 216,000 (Briefing.com consensus 215,000). Continuing claims for the week ending February 22 increased by 7,000 to 1.729 million.
The key takeaway is that the labor market still isn't showing signs of cracking due to the coronavirus, yet that understanding will be offset by the fear that it's going to move in that direction.

February Nonfarm Payrolls (Briefing.com consensus 170,000; prior 225,000), Nonfarm Private Payrolls (Briefing.com consensus 160,000; prior 206,000), Average Hourly Earnings (Briefing.com consensus 0.3%; prior 0.3%), Average Workweek (Briefing.com consensus 34.3; prior 34.3), Unemployment Rate (Briefing.com consensus 3.6%; prior 3.6%), and January Trade Balance (Briefing.com consensus -$46.00 bln; prior -$48.90 bln) will be reported tomorrow at 8:30 ET, followed by January Wholesale Inventories (Briefing.com consensus -0.2%; prior -0.3%) at 10:00 ET, and January Consumer Credit (Briefing.com consensus $17.50 bln; prior $22.00 bln) at 15:00 ET.

Nasdaq Composite -2.6% YTD
S&P 500 -6.4% YTD
Dow Jones Industrial Average -8.5% YTD
Russell 2000 -11.4% YTD

Market Snapshot
Dow 26121.28 -969.58 (-3.58%)
Nasdaq 8738.60 -279.49 (-3.10%)
SP 500 3023.94 -106.18 (-3.39%)
10-yr Note +19/32 0.926
NYSE Adv 314 Dec 2488 Vol 1.40 bln
Nasdaq Adv 578 Dec 2641 Vol 3.71 bln

Industry Watch
Strong:
Weak: Financials, Energy, Industrials, Materials, Communication Services

Moving the Market

Treasuries continue climbing

Volatility continues as coronavirus-related worries persist

Foxconn reports 14% yr/yr decrease in revenue for January and February

On Lows Into Home Stretch
05-Mar-20 15:25 ET
Dow -1109.01 at 25981.85, Nasdaq -329.85 at 8688.24, S&P -126.03 at 3004.09

[BRIEFING.COM] The major averages have slid to fresh session lows going into the final 30 minutes of action. The S&P 500 (-4.0%) is now revisiting its opening level from Tuesday, narrowing this week's gain to 1.7%.

Investor sentiment remains bruised, which has kept a lid on all rebound attempts. The CBOE Volatility Index (VIX 42.38, +10.39, +32.5%) could overtake its high from Monday if it climbs another two points before today's session ends.

In commodities, crude oil fell $0.88, or 1.9%, to $45.89/bbl even though OPEC reportedly agreed to reduce output by 1.5 mln barrels per day.