Closing Stock Market Summary
The major equity indices registered significant declines for the second consecutive session on above-average volume. The Nasdaq Composite (-5.8%) entered a bear market after dropping more than 20% below its peak. The S&P 500 fell 6.0% and the Dow Jones Industrial Average dropped more than 2,000 points.
China retaliated against U.S. tariffs with its own 34% duty on imports, heightening the trade war and tempering hopes that tensions may ease soon. Global slowdown worries are also intensifying as a results, leading to a risk-off bias in today's broad retreat.
Oil prices sank (-7.5% to $62.02/bbl), Treasury yields dropped (2-yr note yield -5 bps to 3.67%, 10-yr note yield -7 bps to 3.99%), and the CBOE Volatility Index (VIX) surged above 45.0.
The trade war and slowdown fear overshadowed today's economic data even though nonfarm payroll growth accelerated to 228,000 (Briefing.com consensus 130,000) in March. To be fair, downward revisions to growth figures from January and February removed some of that report's shine.
The market was not placated by commentary from Fed Chair Powell indicating that did not seem too concerned with the recent volatility in markets. He acknowledged that tariff increases are larger than expected, which will provide a stronger headwind to growth, but he also said that the FOMC will patiently wait for greater clarity before making any adjustments to policy.
All 11 S&P 500 sectors declined more than 2.5% with energy at the bottom of the lineup, dropping 8.7% from yesterday. The heavily-weighted financial (-7.4%) and technology (-6.3%) sectors were the next worst performers.
- Dow Jones Industrial Average: -9.9% YTD
- S&P 500: -13.7% YTD
- S&P Midcap 400: -15.1% YTD
- Russell 2000: -18.1% YTD
- Nasdaq Composite: -19.3% YTD
Reviewing today's economic data:
- March Nonfarm Payrolls 228K (consensus 130K); Prior was revised to 117K from 151K, March Nonfarm Private Payrolls 209K (consensus 120K); Prior was revised to 116K from 140K, March Avg. Hourly Earnings 0.3% (consensus 0.3%); Prior was revised to 0.2% from 0.3%, March Unemployment Rate 4.2% ( consensus 4.1%); Prior 4.1%, March Average Workweek 34.2 (consensus 34.2); Prior was revised to 34.2 from 34.1
- The key takeaway from the report is that positive results for March are being somewhat offset by downward revisions to figures from January and February, so on balance, the report is unlikely to alter the Fed's view of the current state of the labor market.
Looking ahead to next week, market participants receive the February Consumer Credit (consensus $15.1 bln; prior $18.1 bln) at 15:00 ET on Monday.