U.S. equities began the new week where it left off from last week, notching solid losses amid persistent global growth anxiety, as a drop in both domestic regional manufacturing activity and homebuilder sentiment joined recent disappointing economic data out of China and the Eurozone. Uncertainty surrounding Wednesday’s looming Fed monetary policy decision added another wrinkle to the landscape. Treasury yields fell, as did the U.S. dollar and crude oil prices, and gold was higher. On the equity front, Jack in the Box said it was exploring strategic alternatives, while shares of Dow member Goldman Sachs fell amid a report of criminal charges filed by Malaysia.
The Dow Jones Industrial Average (DJIA) tumbled 508 points (2.1%) to 23,593, the S&P 500 Index dropped 54 points (2.1%) to 2,546, and the NASDAQ Composite plunged 157 points (2.3%) to 6,754. In heavy volume, 1.1 billion shares were traded on the NYSE and 2.6 billion shares changed hands on the NASDAQ. WTI crude oil fell $1.32 to $49.88 per barrel and wholesale gasoline was down $0.02 at $1.41 per gallon. Elsewhere, the Bloomberg gold spot price was up $6.97 at $1,245.99 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—decreased 0.3% to 97.13.
The Empire Manufacturing Index showed output from the New York region fell much more than expected but remained at a level denoting expansion (a reading above zero) for December. The index dropped to 10.9—the lowest since May 2017—from November’s unrevised 23.3 level, with the Bloomberg forecast calling for a decline to 20.0.
The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment this month unexpectedly declined to 56 from November’s unrevised 60 level, where it was expected to remain. A level of 50 separates good and poor conditions. This was the lowest level since May 2015, and the NAHB noted the growing housing affordability crisis is hurting the market. The NAHB added that this housing slowdown is an early indicator of economic softening, and it is important that builders manage supply-side costs to keep home prices competitive for buyers at different price points.
Treasuries were higher, as the yield on the 2-year note declined 5 basis points to 2.69%, while the yields on the 10-year note and the 30-year bond were down 4 bps to 2.85% and 3.11%, respectively. The U.S. dollar found some pressure amid the festering global growth worries and as hopes of a trade deal between the U.S. and China are lingering, while recently flared-up political concerns are also in focus after last week’s contentious debate on camera between President Donald Trump and democratic leaders that furthered the uncertainty about a potential government shutdown.
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