U.S. stocks fell in volatile trading on Friday after President Donald Trump’s coronavirus diagnosis fueled concerns about the election and a worsening pandemic.
Major averages clawed back some of the steep losses after House Speaker Nancy Pelosi signaled aid for the airline industry could be coming soon, perhaps even as part of a much-anticipated broad relief bill.
The Dow Jones Industrial Average closed 134.09 points, or 0.5%, lower at 27,682.81 after dropping 430 points at its session low. The S&P 500 slid 1.0%, or 32.36 points, to 3,248.44 after falling as much as 1.7% earlier. The Nasdaq Composite declined 2.2%, or 251.49 points, to 11,075.02.
Shares of airlines jumped higher in unison after Pelosi called on the industry to delay furloughs, saying relief for airline workers is “imminent.” American Airlines and United erased earlier losses and popped 3.3% and 2.4%, respectively.
Weaker-than-expected job growth in September sent a signal that the sharp economic recovery off the coronavirus shutdown may be hitting a wall.
The Labor Department reported Friday that nonfarm payrolls increased by 661,000 in September, held back by declines in government employment and an exodus of workers from the labor force.
In normal times, that type of hiring pace would be considered a sign of a robust job market. The total, in fact, would have been the best month the U.S. had seen since 1983 – if these were normal times and not amid the Covid-19 era that has changed the benchmarks by which economic data is measured.
As it stood, the total was a fairly wide miss from Wall Street’s expectation of 800,000. The unemployment rate fell more than expected to 7.9%, but that was mostly due to a sharp decline in labor force participation.
Taken together, the report is a potential early flare from the business community that a rebound during which 11 million jobs were refilled in four months could be petering out.
“This report is an illusion of progress at a time when we needed accelerating gains in the labor market. The number of jobs added this month is just not enough,” said Nick Bunker, economic research director at job placement site Indeed. “This report is massively concerning. We are not where we need to be, nor are we moving fast enough in the right direction as we head into fall.” Data has looked good, but ...
The timing of the report is inauspicious in that most of the backward-looking economic indicators have been solid.
Housing stands out the most as the residential market is struggling to find supply to meet all the demand. Retail sales have been solid, and manufacturing is back into expansion after heading in the wrong direction for a few months.
The Citi Economic Surprise Index, which measures the data versus Wall Street expectations, has cooled since soaring to its historic peak in mid-July but still is above anything before the pandemic.
Most tellingly, consumer confidence remains strong. But that may not last, particularly if the jobs numbers weaken and the stock market continues to struggle.
“The real question in my mind is why consumers are so upbeat and why they remain upbeat. Until I can answer that, I don’t know how persistent the expansion is going to be,” said Drew Matus, chief market strategist at MetLife Investment Management. “People are underestimating how long the impact of what we’ve been through is going to last. In that regard, there’s some downside risk to the outlook.”
At the moment, the economy remains mostly in a rally mode off the unprecedented slump in the second quarter brought on by the coronavirus-induced shutdown. GDP is projected to increase by as much as a 32% annualized pace in the second quarter after tumbling 31.4% in Q2 and 5% to start the year.
U.S. stocks tumbled on the first trading day of the year, retreating sharply from records set just days ago.
Investors are starting off the new year fixated on the same issue that dominated markets for much of 2020: the coronavirus pandemic. Many believe economic activity will pick up later this year as more of the population is vaccinated and businesses are able to reopen. But they acknowledge the path to recovery will likely be long and uneven.
News on the pandemic front has painted a grim picture in recent days. Hospitalizations in the U.S. jumped to a record Sunday. Meanwhile, governments across Europe are extending lockdowns to try to slow the spread of the virus.
The difficulties that countries face in containing the pandemic mean many companies will remain vulnerable to financial pressures in the near term.
The Dow Jones Industrial Average fell 382.59 points, or 1.3%, to 30223.89. The S&P 500 shed 55.42 points, or 1.5%, to 3700.65 and the Nasdaq Composite declined 189.83 points, or 1.5%, to 12698.45.
"We have continued concerns over Covid-19 and the ability to staunch this wave, not just in the U.S. but globally," said Quincy Krosby, chief market strategist at Prudential Financial.
Ms. Krosby added that there appeared to be growing nervousness over Tuesday's Georgia runoff races, which will determine whether Republicans are able to hold on to control in the Senate. In recent days, betting markets have shown the Republican lead shrinking, pointing to what will likely be a tight race.
"These are all of these concerns, and then we have a market that is priced to perfection, which is denting returns right now," Ms. Krosby said.
Among individual stocks, Coca-Cola shares fell $2.07, or 3.8%, to $52.77. RBC Capital Markets analysts downgraded the stock to "sector perform" from "outperform," saying they believe the pandemic will continue to limit major public events and dining at restaurants, potentially hurting demand for Coca-Cola's products.
Airline stocks, another group that has been hard hit by the pandemic, fell as well, with American Airlines falling 65 cents, or 4.1%, to $15.12 and Delta Air Lines losing $1.48, or 3.7%, to $38.73.
Hotel operators also retreated, with Hilton Worldwide Holdings shedding $3.74, or 3.4%, to $107.52 and Marriott International losing $7.11, or 5.4%, to $124.81.
One stock that bucked the trend Monday: Tesla. The electric-car maker rose $24.10, or 3.4%, to $729.77 after saying it delivered a record 499,550 cars last year, just shy of its half a million target.
As investors broadly withdrew from stocks, gold prices jumped 2.7% to $1,944.70 a troy ounce, posting their biggest one-day percentage gain since April. The precious metal tends to gain favor with investors when market volatility increases.
Overseas, the pan-continental Stoxx Europe 600 rose 0.7%, paring earlier gains.
The U.K.'s FTSE 100 added 1.7%. The trade deal struck on Christmas Eve between the U.K. and the European Union is likely delivering a boost to British stocks, said Sebastian Mackay, a multiasset fund manager at Invesco.
"A lot of the tail risks of a no deal [Brexit] have been removed now. This will lead people to start dipping their toes again in the U.K. market," he said.
Investors also said they were reassured by newly released data on the health of the manufacturing sector. Factories in Asia and Europe increased their output as 2020 drew to a close, according to surveys of purchasing managers that showed strong rises in activity during December.
"We're going through renewed lockdowns, which is curtailing activity to some extent, but what we've seen through the pandemic is that manufacturing activity tends to hold up quite well," Mr. Mackay said.
Most major stock benchmarks in the Asia-Pacific region advanced. South Korea's Kospi Composite led gains, rising 2.5%.
China's Shanghai Composite rose 0.9%, even after a private survey showed China's manufacturing activity moderated in December due to weak demand for the country's exports.
Ben Luk, senior multiasset strategist at State Street Global Markets, said the data pointed to continued fragility in the Chinese economy. But he said that helped ease concerns that China's central bank would act prematurely to tighten monetary policy.
Japan's Nikkei 225 dropped 0.7% after Prime Minister Yoshihide Suga said he might declare a state of emergency in Tokyo and surrounding areas as new coronavirus infections continue to rise.
President-Elect Joe Biden unveiled a $1.9 trillion stimulus package that includes direct payments to Americans, a $15 minimum wage, aid to small businesses, and a national vaccination program, among many other provisions.
The $1.9 trillion legislation includes $1,400 stimulus payments on top of the $600 being distributed, the extension of key unemployment programs that are set to expire in the spring, aid to small businesses, $350 billion to state and local governments, increase in tax credits for low- and middle-income families, and $160 billion for a national program on vaccination and testing.
The $2,000 direct payments would be an increase from the $600 direct payments currently being distributed, meaning eligible Americans would potentially receive an additional $1,400 (as well as an additional $1,400 for each dependent). The legislation would also expand the additional bonus for dependents from each dependent under 17 to each dependent of any age.
The extra weekly amount in unemployment benefits would be increased to $400 a week, up from the current $300 a week. Biden’s plan would also extend those benefits through September — currently, the additional benefit lapses on March 14. Under his plan, Biden would also extend the program that provides jobless benefits to workers who typically don’t qualify for regular benefits.
The number of Americans applying for unemployment benefits rose last week to almost a million people as the latest unemployment figures still remain at levels never seen until the virus struck.
The latest report released by the Labor Department Thursday shows that the number of people filing for jobless benefits increased by 181,000 to a total of 965,000, the most since late August. The previous week showed a slight decrease.
“The rise and level of new unemployment claims is shocking, at the highest point seen since late August,” said Mark Hamrick, senior analyst at Bankrate. “This reminds us that the economic crisis has not gone away, far from it, at a time when multiple crises have been vying for our attention. It hasn’t helped that administration of COVID-19 vaccines has been slow to gather momentum since the pandemic is at the epicenter of the economy’s ills.”
Ms. Murkowski said the second impeachment of Mr. Trump stood “in stark contrast” to the first, which she and virtually every other Republican opposed. She said Mr. Trump had perpetuated “false rhetoric that the election was stolen and rigged” and launched a “pressure campaign against his own vice president, urging him to take actions that he had no authority to do.”
“On the day of the riots, President Trump’s words incited violence, which led to the injury and deaths of Americans — including a Capitol Police officer — the desecration of the Capitol, and briefly interfered with the government’s ability to ensure a peaceful transfer of power,” Ms. Murkowski said.
Her remarks came the day after the House — with support from 10 Republicans — impeached the president on a single charge of “incitement of insurrection,” and as Republicans faced the prospect of a trial that could begin as soon as next week.
A Look at Eight New Leveraged Single-Stock ETFs AXS Investments this week is launching eight new leveraged single-stock ETFs focusing on companies including Tesla Inc. (TSLA), Nvidia Inc. (NVDA), PayPal Inc. (PYPL), Nike Inc. (NKE), and Pfizer (PFE).
What was a massive rally on Wall Street has turned into yet another sizeable decline.
Cheap stocks and hope for signs of trade negotiation sent markets surging Tuesday morning — but that relief rally evaporated as the White House said it would levy enormous tariffs on China.
4th business day after Trump announced reciprocal tariffs US stocks fell solidly into the red in the afternoon. The Dow was down 240 points, 0.6%. The broader S&P 500 fell 1.3%. The tech-heavy Nasdaq Composite slid 1.8%.
Stock market today: Dow explodes 3,000 points higher, S&P 500 has best day since 2008 as Trump pauses most reciprocal tariffs US stocks rocketed higher on Wednesday as President Trump announced a 90-day pause on tariffs for most countries. Trump also said that the US would be raising its tariffs on China to 125%. The benchmark S&P 500 (^GSPC) roared up over 9.5%, posting its best day since 2008. The tech-heavy Nasdaq Composite (^IXIC) rallied a whopping 12% for its second-best day on record and its biggest gain since 2001. The Dow Jones Industrial Average (^DJI) was up over 7.8%, or roughly 3,000 points.
5th business day after Trump announced reciprocal tariffs
China knows Trump’s breaking point https://finance.yahoo.com/news/commentary-china-knows-trumps-breaking-point-213645787.html Several weeks of manic tariff activity by Trump and mass confusion in financial markets have finally provided some clarity: Though Trump wants to remake America’s entire trade system, his real target is China. As financial markets cratered, Trump finally backed down on April 9 by suspending most of his country-specific “reciprocal” tariffs for at least 90 days, until early July. The one notable exception is China, which got the opposite treatment: even higher tariffs.
The Trump tariff on Chinese imports is now 145%, up from about 6%, on average, when Trump took office and trained his sights on the world’s No. 2 economy. The tariff rate is so high that it’s “an effective blockade on Chinese imports,” according to Heidi Crebo-Rediker, former chief economist at the State Department and a senior fellow at the Council on Foreign Relations.
That leaves China in a uniquely adversarial position with Trump. China has retaliated against the Turmp tariffs far more aggressively than most other US trade partners, including many that didn’t retaliate at all and instead offered to make concessions. The China tariff on American goods is now 84%, and China has taken other measures to punish American businesses. China’s rhetoric has also been far more bellicose than anybody else’s, with its Commerce Ministry saying in a statement that China “will fight to the end.”
Xi has some advantages. For one thing, Trump’s tariffs are a tax on American businesses and consumers, not on Chinese exporters, which is why the first line of damage is to US stock prices.
Investor losses driven by Trump’s unilateral tariff moves are a built-in barrier to how far Trump can go. “President Trump does lose leverage if equities keep falling,” Tom Lee, co-founder of investing firm Fundstrat, said in an April 7 video briefing, amid the stock-market sell-off. By the time Trump bailed on his reciprocal tariffs on April 9, the S&P 500 index had dropped nearly 20% from its peak, putting it on the cusp of a bear market. So a 20% plunge in stock values may be one measure of Trump’s pain threshold.
But from April 4 to April 9, US Tresasury yields rose by more than four-tenths of a percentage point, when normally they would have been falling. At the same time, the value of the dollar fell by an unusually large amount against the euro and other currencies, suggesting that a disorderly sell-off of US assets with potentially dire consequences could be underway. That added to the pressure on Trump. “The spike in the 10- and 30-year Treasury seemed to be the ultimate pressure point for Trump to pause these tariffs for 90 days,” Crebo-Rediker said.
Investors are suddenly wondering whether China or a group of US trade adversaries could cause a US financial crisis by deliberately selling Treasuries to drive US interest rates up, which could freeze credit markets. A credit crisis is generally worse than a stock sell-off because if can affect the liquidity companies need to pay their bills, especially if it happens fast. A credit crunch and frozen liquidity helped turn the 2008 housing bust into a financial crash that nearly became a depression.
China Stocks Extend Gains as Stimulus, Deal Hopes Get Upper Hand
The mood was less upbeat in the morning session, after the White House clarified Thursday that after including a 20% levy imposed earlier this year, the total tariffs on China stand at 145%, a level far above what many economists said could decimate US-China trade.
Stocks were rising on the potential easing in US-China tensions after Trump indicated the willingness to “exempt thousands of products from tariffs,” said Steven Leung, an executive director at UOB Kay Hian Hong Kong. “Investors are also expecting some supportive measures in China after top officials’ recent meetings.”
Trump said Thursday he thought the first trade deals are “very close” and voiced optimism that China would eventually come to the table.
A prolonged trade war may also result in Chinese stocks’ underpeformance in Asia, Nomura Holdings Inc. strategist Chetan Seth warned. “We think HK/China equities are still not off of the hook yet – and will likely lag the region as US-China trade tensions are only rising,” Seth wrote in a note Thursday.
Schiff’s critique highlights the potential consequences of Trump’s aggressive trade tactics. By implementing sweeping tariffs and then abruptly pausing them, Trump may have signaled to trading partners that his threats are not as credible as initially perceived. This perceived weakness could undermine his negotiating position in future trade talks.
US stocks will fall into a bear market in the coming months
Let's see how accurate this Senior technical analyst Tom DeMark prediction is!
If two new highs occur, the S&P 500 index potentially falls below the intraday low of 4835 in April, representing a 20% correction from the February high, thus entering a bear market.
His creed is: the market peaks when good news arrives, and bottoms when bad news arrives.
This Friday, the S&P 500 index has risen for the ninth consecutive day, marking its longest rising cycle since 2004. According to DeMark's latest forecast, the market's recent peak may occur within a few days, and the current level of 5669 points for the S&P may exhaust buyers
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