U.S. stocks modestly added to only the second weekly decline of 2019, courtesy of resurfacing global growth uneasiness, as a drop in Chinese exports was followed by a surprising fall in German factory orders. Stocks came well off of intraday lows as the markets grappled with a mixed February U.S. nonfarm payroll report that showed job growth severely missed forecasts but the unemployment rate and wages were stronger than expected. Moreover, domestic housing construction activity rebounded, while Costco and Big Lots rallied on their earnings results. Treasury yields and the U.S. dollar were lower, along with crude oil prices, while gold was higher.

The Dow Jones Industrial Average (DJIA) dropped 23 points (0.1%) to 25,450, the S&P 500 Index fell 6 points (0.2%) to 2,743, and the NASDAQ Composite decreased 13 points (0.2%) to 7,408. In moderate volume, 816 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil fell $0.59 to $56.07 per barrel and wholesale gasoline was off $0.01 at $1.80 per gallon. Elsewhere, the Bloomberg gold spot price rose $14.58 to $1,300.20 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—declined 0.3% to 97.36. Markets were solidly lower on the week, as the DJIA and the S&P 500 Index fell 2.2%, while the NASDAQ Composite dropped 2.5%.

Nonfarm payrolls rose by 20,000 jobs month-over-month (m/m) in February, compared to the Bloomberg forecast of a 180,000 increase. The rise of 304,000 seen in January was revised to a gain of 311,000 jobs. Excluding government hiring and firing, private sector payrolls increased by 25,000, versus the forecasted gain of 170,000, after rising by 308,000 in January, revised from the 296,000 increase that was initially reported. Job growth was seen in professional and business services, health care and wholesale trade, while employment in construction fell and was little changed in leisure and hospitality, mining, retail trade and government. The job growth miss wasn’t the only negative aspect of the report, as average weekly hours ticked lower to 34.4 from January’s unrevised 34.5 rate, where it was expected to remain.

However, there were some bright spots that appear to have the markets grappling with the report, as the unemployment rate fell from 4.0% to 3.8%, versus estimates calling for a dip to 3.9%, and the underemployment rate, also referred to as the U-6, fell sharply from 8.1% to 7.3%—the lowest since 2001. The U-6 includes those not used in the calculation of the unemployment rate, such as part time workers for economic reasons and those less active in looking for a job. The sharp drop in this figure came as those part time for economic reasons dropped after January’s spike that may have resulted from the government shutdown. Moreover, average hourly earnings rose 0.4% m/m, above projections of a 0.3% gain and versus January’s unrevised 0.1% increase, and wage gains were 3.4% higher y/y, north of the expected 3.3% increase and January’s downwardly revised 3.1% rise.

Housing starts for January rose 18.6% m/m to an annual pace of 1,230,000 units, above the forecast of 1,195,000 units. December starts were revised lower to an annual pace of 1,037,000. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, grew 1.4% m/m to an annual rate of 1,345,000, versus expectations of a 1,287,000 pace, and compared to December’s unrevised 1,326,000 rate.

Treasuries were higher, with the yields on the 2-year and 10-year notes dipping 1 basis point to 2.47% and 2.63%, respectively, while the 30-year bond rate declined 2 basis points to 3.01%.

Stocks followed last week’s pause with a retreat as the majority of major sectors lost ground, with the markets appearing to be fatigued after the sharp rally off of December lows, as lingering expectations of a U.S.-China trade deal failed to keep the rally going. As such, global growth worries resurfaced, with China delivering another dose of disappointing economic data and a lowered growth outlook, while the ECB slashed its outlook at its monetary policy meeting and the domestic economic calendar was mixed.

Today’s mixed labor report was preceded by the trade gap widening to its largest deficit in just over a decade and the Fed’s Beige Book painting a downbeat picture of business activity across the nation. However, new home sales and housing construction activity both easily topped forecasts, Q4 nonfarm productivity was stronger than expected and the ISM non-Manufacturing Index showed growth in the key services sector accelerated more than projected. The U.S. dollar gained steam, briefly touching a high not seen since 2017 as the euro fell on the ECB monetary policy decision, and Treasury yields declined, while crude oil prices nudged higher.

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