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US Stock Market Overview – Stocks Drop, as Yields Hit Fresh Lows, Crude Drops by Nearly 10%

David Becker

US stocks were hammered as volatility continued to rise and the 10-year yield hit a fresh new low. The concern in the market is reflected in very high implied volatility that is backed up by the US 10-year yield hitting 64-basis point down 25-basis points in a day. This comes following a stronger than expected jobs report.

Unfortunately, that survey period ended the week of February 12, which his not reflective of the current market environment. Yields initially moved higher on the move and so did the US dollar, but both assets were quick to turn which weighed on US equities. The VIX volatility index surged higher rising to 54.39 but closed well off the highs of the day. All sectors in the S&P 500 index were lower, led down by energy, which tumbled more than 9%. Utilities were the best performing sector in a down tape.

Jobs Data was Stronger than Expected

The coronavirus likely took a toll on March jobs data, but investors will not be privy to that data for another month. The last piece of nationwide jobs data they will receive showed a better than expected non-farm job creation. The Labor Department reported that the US added 273,000 new jobs during the month, while the unemployment rate was 3.5%, matching its lowest level in more than 50 years. Expectations were for job growth of 175,000 and a 3.5% jobless level. Average hourly earnings grew by 3% over the past year, in line with estimates, while the average workweek, nudged up to 34.4 hours. The previous two months’ estimates were revised higher by a total of 85,000.

US Trade Deficit Narrowed

The U.S. trade deficit narrowed more than expected in January. The Commerce Department reported that the trade deficit dropped 6.7% to $45.3 billion also as exports fell. December data was revised slightly to show the trade gap widening to $48.6 billion instead of $48.9 billion as previously reported. Expectations were for the trade gap tightening to $46.1 billion in January.

This article was originally posted on FX Empire

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