Markets Lose Steam Into the Close…….

U.S. equities lost steam in the final minutes of trading to finish mixed, as reports of some dissent among a few members of the Senate over wording in the near $2.0 trillion fiscal stimulus package that fueled early optimism and stock gains appeared to bring back some uncertainty of passage of the accord today. Enthusiasm surrounding the massive economic deal was a main catalyst for yesterday’s jump and would follow this week’s drastic monetary policy measures the Fed deployed to help restore proper financial market functioning. Treasury yields were mixed and the U.S. dollar traded lower, while crude oil prices nudged higher and gold lost ground. In economic news, durable goods orders came in mixed and mortgage applications tumbled. On the equity front, Dow member Nike posted stronger-than-expected revenues despite the impact of the coronavirus on its Chinese operations, and Facebook noted that it is unable to monetize the surge in engagement of many of its services. Europe and Asia finished with solid gains.

The Dow Jones Industrial Average rose 496 points (2.4%) to 21,201, the S&P 500 Index advanced 28 points (1.2%) to 2,476, while the Nasdaq Composite lost 34 points (0.5%) to 7,384. In heavy volume 1.7 billion shares were traded on the NYSE and 4.3 billion shares changed hands on the NASDAQ. WTI crude oil rose $0.48 to $24.49 per barrel and wholesale gasoline was up $0.10 at $0.61 per gallon. Elsewhere, the Bloomberg gold spot price fell $21.62 to $1,610.70 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 1.1% lower at 100.96.

Stocks finished mixed, losing steam in the final minutes of trading amid reports of some discord among some members of the Senate over certain aspects of the near $2.0 trillion “phase three” stimulus package to try to combat the impact of the coronavirus pandemic. The package reportedly includes direct payments to households, aid to small businesses, industries, cities and states that have been severely impacted by the outbreak, as well as expanded unemployment benefits and more funding for hospitals. Yesterday’s surge in the markets that saw the Dow register the largest percentage-point gain since 1933 and the S&P 500 rise by the most since 2008, was bolstered by expectations that U.S. lawmakers would pass the large stimulus package. The markets continue to digest the decisive monetary policy measures deployed by the Federal Reserve aimed at restoring the financial market plumbing in the form of open-ended purchases of Treasury and mortgage-backed securities “in the amounts needed,” the buying of corporate bond securities and expanding its Commercial Paper Funding Facility (CPFF), aimed at facilitating the flow of credit to municipalities. Moreover, the Fed said it expects to announce soon the establishment of a Main Street Business Lending Program to support lending to eligible small-and medium sized businesses, complementing efforts by the Small Business Administration (SBA).

February preliminary durable goods orders rose 1.2% month-over-month (m/m), versus the Bloomberg estimate of a 0.9% drop and compared to January’s upwardly-revised 0.1% gain. Ex-transportation, orders declined 0.6% m/m, versus forecasts of a 0.4% decrease and versus January’s downwardly-adjusted 0.6% gain. Moreover, orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, dropped 0.8%, compared to projections of a 0.4% decrease, while the prior month’s figure was revised modestly lower to a 1.0% increase.

The MBA Mortgage Application Index fell by 29.4% last week, following the prior week’s 8.4% decline. The sharp drop came as a 33.8% tumble in the Refinance Index was met with a 14.6% fall for the Purchase Index. The average 30-year mortgage rate rose 8 basis points (bps) to 3.82%.

Treasuries were mixed amid continued volatility in the markets, as the yield on the 2-year note lost 1 bp to 0.38%, the yield on the 10-year note rose 2 bps to 0.84%, while the 30-year bond gained 4 bps to 1.41%.

©2020 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.