U.S. stocks sold off to end the week, while investors continued to buy less risky assets, amid pestering concerns about the coronavirus and valuation. The Nasdaq Composite led the retreat with a 1.8% decline, followed by the S&P 500 (-1.1%), Russell 2000 (-1.0%), and Dow Jones Industrial Average (-0.8%).
Reported cases of the coronavirus continued to climb in China, but that wasn't new information for the market -- or investors who were buying yesterday's dip. Arguably, the bigger story was the continued flight-to-safety in gold ($1648.90/ozt, +28.90, +1.8%) and U.S. Treasuries (30-yr yield set a new all-time low at 1.89%).
The defensive positioning was attributed not only to the coronavirus fostering growth concerns, but also to the record run in U.S. stocks despite the coronavirus. The latter bolstered calls that the market had gotten overextended and was due for a pullback. The Markit flash services PMI for February, which fell into contraction territory, didn't help sentiment, either.
The top-weighted S&P 500 information technology (-2.3%) sector was today's outright laggard amid broad-based selling. The gains in the real estate (+0.4%) and consumer staples (+0.3%) sectors reflected the market's defensive posture and helped limit the broader decline.
Apple (AAPL 313.05, -7.25, -2.3%), Amazon (AMZN 2095.97, -57.13, -2.7%), Alphabet (GOOG 1485.11, -33.04, -2.2%), and Microsoft (MSFT 178.59, -5.83, -3.2%) -- four widely-held, and crowded, stocks largely responsible for the market's record run -- sold off more than 2% on Friday.
Deere (DE 177.43, +11.60, +7.0%) was among the few bright spots in the market after the company reported solid quarterly results.
U.S. Treasuries, as previously stated, continued to post gains. The 2-yr yield declined four basis points to 1.35%, and the 10-yr yield declined five basis points to 1.47%. The U.S. Dollar Index fell 0.5% to 99.32. WTI crude declined 0.7%, or $0.40, to $53.34/bbl.
Reviewing Friday's economic data, which featured the Existing Home Sales report for January:
- Existing home sales increased 3.6% m/m in December to a seasonally adjusted annual rate of 5.54 million units (consensus 5.42 million) from 5.35 million in November. Total sales were up 10.8% year-over-year.
- The key takeaway from the report is that there are serious inventory constraints in the existing home sales market, which is driving up prices and underscoring the importance of mortgage rates staying low.
Investors will not receive any notable economic data on Monday.
- Nasdaq Composite +6.7% YTD
- S&P 500 +3.3% YTD
- Dow Jones Industrial Average +1.6% YTD
- Russell 2000 +0.6% YTD
Closing Stock Market Summary