U.S. equities added to yesterday’s tumble, closing with solid losses, as investors await a slew of economic and earnings events that could shape sentiment this week. Heavyweights from the tech sector are set to report earnings, the Fed will conclude its monetary policy meeting tomorrow, President Trump is set to deliver his first State of the Union address, and Friday brings January’s labor report. The persistent rise in Treasury yields continued to garner attention, while the U.S. dollar resumed its decline, and gold and crude oil prices were lower. The healthcare sector saw pressure following an announcement of a partnership among Amazon, Berkshire Hathaway and JPMorgan Chase & Co.

The Dow Jones Industrial Average (DJIA) plunged 362 points (1.4%) to 26,077, the S&P 500 Index tumbled 31 points (1.1%) to 2,822, and the NASDAQ Composite declined 64 points (0.9%) to 7,403. In moderately-heavy volume, 915 million shares were traded on the NYSE and 2.1 billion shares changed hands on the NASDAQ. WTI crude oil fell $1.06 to $64.50 per barrel and wholesale gasoline lost $0.05 to $1.87 per gallon. Elsewhere, the Bloomberg gold spot price moved $3.04 lower to $1,337.29 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—shed 0.1% to 89.22.

The Consumer Confidence Index rose to 125.4 in January, from December’s upwardly revised 123.1, versus the Bloomberg estimate of a 123.0 reading. This was the strongest reading since November’s 17-year high, as a decline in the Present Situation Index was more than offset by an improvement in the Expectations Index of business conditions for the next six months. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—rose to 21.2 from the 20.3 level posted in December.

The 20-city composite S&P Core Logic Case-Shiller Home Price Index showed a 6.4% y/y gain in home prices in November, versus expectations of a 6.3% rise. Month-over-month (m/m), home prices were up 0.8% on a seasonally adjusted basis for November, north of forecasts calling for a 0.6% rise.

Treasuries were lower, as the yield on the 2-year note was flat at 2.12%, while the yields on the 10-year note and the 30-year bond advanced 3 bps (bps) to 2.72% and 2.97%, respectively. Treasury yields continue to grind higher to multi-year highs and the U.S. Dollar Index was back under pressure after yesterday’s recovery from a recent tumble to multi-year lows.

Schwab Center for Financial Research – Market Analysis Group

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