Markets Lose Steam to Finish Solidly Lower…….

U.S. equities fell, finishing near their lows of the day, as the continued uncertainty surrounding the COVID-19 pandemic continues to keep investors on edge. While market participants continued to eye the massive amount of fiscal and monetary policy responses, including the Fed deploying another dose of extraordinary actions, the palpable anxiety regarding the depth and duration of the coronavirus disruption remained. The losses came despite some cautious optimism that continues to linger amid recent news out of the healthcare sector suggesting detection and treatment of the coronavirus may speed up. Treasury yields were mixed, gold tumbled, crude oil prices inched higher and the U.S. dollar saw a modest decline. In economic news, home prices rose in January, while more timely reads showed Consumer Confidence and regional manufacturing declined by smaller amounts than expected. News on the equity front was light, as McCormick & Company fell following its earnings report, while Conagra gained ground after offering positive guidance. Europe finished to the upside, while Asia was mixed.

The Dow Jones Industrial Average declined 410 points (1.8%) to 21,917, the S&P 500 Index lost 42 points (1.6%) to 2,585 and the Nasdaq Composite shed 74 points (1.0%) to 7,700. In heavy volume 1.7 billion shares were traded on the NYSE and 4.0 billion shares changed hands on the NASDAQ. WTI crude oil rose $0.39 to $20.48 per barrel and wholesale gasoline was down $0.03 at $0.59 per gallon. Elsewhere, the Bloomberg gold spot price decreased $42.85 to $1,579.66 per ounce, while the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% lower at 99.05.

The equity markets ended lower in a choppy trading session, paring the sharp rebound from the low put in on Monday, March 23rd, a level the markets are looking at to see if it will be tested as the severe disruption of the COVID-19 (coronavirus) pandemic continues. The recent bounce was buoyed by Congress’ $2.2 trillion aid package, with expectations for more running high, the Federal Reserve’s drastic monetary policy measures, and some signs of hope from the healthcare sector regarding potentially expedited detection and treatment of the virus.

The Conference Board’s Consumer Confidence Index fell to 120.0 in March, from February’s upwardly-revised 132.6 level, and versus the Bloomberg estimate of 110.0. The index hit the lowest level since July 2017 as the Expectations Index of business conditions for the next six months fell sharply. However, the smaller-than-expected drop came as the Present Situation Index only dipped modestly. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—declined to 31.0 from the 32.6 level posted in February.

The Chicago PMI declined by a smaller rate than expected but remained at a level depicting contraction (a reading below 50), decreasing to 47.8 in March from February’s 49.0 level, and versus forecasts calling for a drop to 40.0. The contraction in new orders and inventories accelerated and production moved back into contraction territory, though the contraction in employment slowed and supplier deliveries expanded at a faster pace.

The 20-city composite S&P CoreLogic Case-Shiller Home Price Index posted a 3.1% y/y gain in home prices in January, versus estimates of a 3.2% increase. Compared to the prior month, home prices were 0.3% higher on a seasonally adjusted basis, versus forecasts to match December’s 0.4% gain.

Treasuries were mixed with the markets grappling with the festering COVID-19 pandemic uncertainty, the passing of the “phase three” fiscal deal and the Fed’s ramped-up stimulus measures. The yield on the 2-year note was down 1 basis point (bp) at 0.22%, the yield on the 10-year note moved 2 bps higher to 0.68%, and the 30-year bond rate was up 4 bps to 1.32%.

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