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Market Remains on Edge as Growth Concerns Build
06-Mar-20 16:25 ET
Dow -256.50 at 25864.78, Nasdaq -162.98 at 8575.62, S&P -51.57 at 2972.37

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

[BRIEFING.COM] The stock market ended a volatile week on a lower note with the S&P 500 (-1.7%) settling just above its low from Monday. The benchmark index gained 0.6% for the week while the Dow Jones Industrial Average (-1.0%) outperformed, gaining 1.8% since last Friday.

The final session of the week was marred by a continued deterioration of sentiment due to the ongoing spread of the coronavirus while the pressure on growth expectations intensified. Treasuries essentially never stopped after Thursday's cash close, continuing their forceful charge in the overnight futures market. Treasuries did pull back from their highs in midday trade, but the long bond rallied to a fresh record high in the afternoon while the 10-yr note stopped a bit short of its best level of the day. The 10-yr yield fell 22 basis points to 0.71%, representing a 42-basis point drop for the week.

Expectations for another sharp rate cut remain in place with the fed funds futures market pointing to a 56.0% implied likelihood of a 75-basis point rate cut at or before the conclusion of the FOMC meeting on March 18.

The S&P 500 staged a 70-point rally during the final hour of trade, which led to a significant improvement in final sector standings, though all eleven sectors finished in the red.

Four groups surrendered 2.0% or more. Energy (-5.6%) and financials (-3.3%) were particularly weak throughout the day due to their exposure to growth and concerns about issuers of high-yield debt in the energy sector.

Bank stocks suffered from the drop in Treasury yields while energy companies struggled as oil fell $4.57, or 10.0%, to $41.32/bbl. The energy component ended the day at its lowest level since mid-2016 after OPEC+ could not agree to a sharp production cut despite yesterday's reports to the contrary. Russia's Energy Minister, Alexander Novak, said that OPEC+ countries are free to pump at will starting from April 1.

Airline stocks like Alaska Air (ALK 45.21, +1.75, +4.0%), JetBlue Airways (JBLU 13.88, +0.02, +0.1%), United Airlines (UAL 52.10, +0.51, +1.0%), and Delta Air Lines (DAL 45.89, +0.88, +2.0%) recorded gains on Friday after recovering from fresh multi-year lows. Alaska Air did warn that its guidance for FY20 should no longer be relied upon due to coronavirus-related uncertainty.

Shares of cruise operators started the day in positive territory but retreated as the day went on. Norwegian Cruise Line Holdings (NCLH 27.10, -1.49, -5.2%) was the weakest performer of the bunch, stopping just above its record low (24.16) that was notched when the company went public in early 2013.

In company-specific news, Costco (COST 311.28, -4.48, -1.4%) reported better than expected Q2 results, but the stock still finished lower. AMD (AMD 48.59, +0.48, +1.0%) fared better than the broader market after reaffirming its guidance for FY20. The chipmaker did caution that Q1 results are likely to be on the low end of its guidance.

The CBOE Volatility Index (VIX 42.14, +2.52, +6.4%) hit an 11-year high at 54.39%, before pulling back as the market jumped off lows in late trade.

Reviewing today's economic data:

February nonfarm payrolls increased by 273,000 (Briefing.com consensus 170,000). Job gains have averaged 243,000 over the last three months. January nonfarm payrolls revised to 273,000 from 225,000
February private sector payrolls increased by 228,000 (Briefing.com consensus 160,000). January private sector payrolls revised to 222,000 from 206,000
February unemployment rate was 3.5% (Briefing.com consensus 3.6%), versus 3.6% in January. Persons unemployed for 27 weeks or more accounted for 19.2% of the unemployed versus 19.9% in January
February average hourly earnings were up 0.3% (Briefing.com consensus +0.3%) after increasing 0.2% in January. Over the last 12 months, average hourly earnings have risen 3.0%, versus 3.1% for the 12 months ending in January
The average workweek in February was 34.4 hours (Briefing.com consensus 34.3), versus 34.3 hours in January
The labor force participation rate was unchanged at 63.4%
The trade deficit narrowed to $45.3 billion (Briefing.com consensus -$46.0 billion) in January from an upwardly revised -$48.6 billion (from -$48.9 bln) in December.
The key takeaway from the report is that it featured a decline in both exports and imports; however, the understanding that this is a January report (i.e. doesn't capture the brunt of the coronavirus impact) will diminish market interest in it
Wholesale inventories decreased by 0.4% in January (Briefing.com consensus -0.2%) after decreasing 0.3% in December
Total consumer credit increased by $12.00 bln in January (Briefing.com consensus $17.50 bln) after increasing a revised $20.20 bln (from $22.00 bln) in December.

There is no economic data on Monday's schedule.

Nasdaq Composite -4.4% YTD
S&P 500 -8.0% YTD
Dow Jones Industrial Average -9.4% YTD
Russell 2000 -13.1% YTD

Market Snapshot
Dow 25864.78 -256.50 (-0.98%)
Nasdaq 8575.62 -162.98 (-1.87%)
SP 500 2972.37 -51.57 (-1.71%)
10-yr Note +28/32 0.706
NYSE Adv 521 Dec 2260 Vol 1.61 bln
Nasdaq Adv 681 Dec 2547 Vol 4.26 bln

Industry Watch
Strong: Industrials, Consumer Discretionary
Weak: Financials, Energy, Materials, Technology

Moving the Market

Stocks remain pressured by plunging growth expectations/falling Treasury yields

Better than expected February jobs report overlooked by the market

Crude Oil Near Four-Year Low
06-Mar-20 15:25 ET
Dow -649.40 at 25471.88, Nasdaq -290.22 at 8448.38, S&P -97.30 at 2926.64

[BRIEFING.COM] The S&P 500 trades lower by 3.2% going into the final 30 minutes of the session.

The benchmark index has jumped more than 25 points over the past 30 minutes as the magnitude of moves in the market remains amplified. The S&P 500 has narrowed this week's loss to 0.9% while the Dow (-2.5%) is up 0.3% for the week.

Crude oil fell $4.57, or 10.0%, to $41.32/bbl, ending the day at its lowest level since mid-2016 after OPEC+ failed to reach an agreement to reduce output.