The Selloff Continues, Rates Touch Record Lows……
For a second day in a row, global equities finished solidly lower. The day started off with a bit of a bounce, but the gains quickly evaporated. The coronavirus was the impetus for the selloff as the geographic footprint of the contagion continues to widen. News on the economic front was not helpful either, as Consumer Confidence missed forecasts and regional manufacturing activity surprisingly fell back into contraction territory. In equity news, Dow member Home Depot and Intuit posted solid earnings reports, which helped them escape some of the selling pressure. Macy’s fell sharply following its quarterly results. Moderna saw big gains after shipping the first batch of its coronavirus vaccine to U.S. government researchers for human clinical trials. Treasury yields fell and on the longer end of the curve, touched record lows with the 10-year rate falling as low as 1.31%. The U.S. dollar suffered from the lower rates. Crude oil prices continued their recent plunge and gold gave back some recent gains.
The Dow Jones Industrial Average shed 879 points (3.2%) to 27,081, the S&P 500 fell 98 points (3.0%) to 3,128 and the NASDAQ fell 256 points (2.8%) to 8,966. In heavy volume, 1.4 billion shares were traded on the NYSE and 3.5 billion shares changed hands on the NASDAQ. WTI oil was down $1.63 to $49.90 per barrel and wholesale gasoline was down $0.08 to $1.53 per gallon. Elsewhere, the Bloomberg gold spot price was down $26.60 to $1,650.00 per ounce. The Dollar Index—a comparison of the U.S. dollar to six major world currencies—shed 0.4% to 98.96.
The Conference Board’s Consumer Confidence Index ticked higher to 130.7 in February, from January’s downwardly-revised 130.4 level, versus the Bloomberg estimate of 132.2. The index showed the Present Situation Index fell noticeably but the Expectations Index of business conditions for the next six months gained solid ground. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—declined to 29.8 from the 35.3 level posted in January.
The 20-city composite S&P CoreLogic Case-Shiller Home Price Index posted a 2.9% y/y gain in home prices in December, versus estimates of a 2.8% increase. Compared to the prior month, home prices were 0.4% higher on a seasonally adjusted basis, compared to forecasts of a 0.5% gain.
The Richmond Fed Manufacturing Activity Index for February unexpectedly fell to a level depicting contraction (a reading below zero), dropping to -2.0 versus forecasts calling for the figure to decline to 10 from January’s 20 level.
Treasuries were higher and it was a record setting day for the longer end of the curve, with the yield on the 2-year note falling 4 basis points (bps) to 1.21%, the 10-year yield falling 4 basis points (bps) to 1.34% and the 30-year bond rate decreasing 3 bps to 1.81%. Bond yields remained under pressure on the data and as the coronavirus concerns continue to foster a flight to safety to weigh on interest rates.
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