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After The Close - The stock market took a major step backwards today. Specifically, equities opened lower, fell further into negative territory in the afternoon, but managed to recover some ground in the final hour of the day. At the close of trading, the Dow Jones Industrial Average was down more than 570 points; the broader S&P 500 Index was off 58 points; and the NASDAQ was lower by 161 points. Market breadth showed widespread selling, as declining issues sharply outnumbered advancers on the NYSE. All of the market sectors moved lower, with intense losses in the technology, industrials, and basic materials issues.

Traders received one major economic news item this morning. Specifically, nonfarm payrolls increased by 103,000 during the month of March. This figure came in well below expectations. Meanwhile, the headline unemployment rate was unchanged at 4.1% for the month. Average hourly earnings rose nicely. The lackluster employment report may have had some on Wall Street speculating that the Federal Reserve will hold off on lifting interest rates, while other investors may have seen it as a setback for the economy. Moreover, concerns in other areas have started to take center stage. Specifically, the Administration’s seeming willingness to implement tariffs on our major trading partners has not been well received by much of the business or investment community, and has created some uncertainty.

In the corporate sector, few major companies released quarterly reports today. The pace will pick up sharply in the weeks ahead, as the first-quarter earnings season kicks off. The large banks usually are the first to weigh in with their numbers.

Technically, today’s decline largely erased the gains logged earlier this week. Today’s selling puts the S&P 500 Index just above its 200-day moving average, located around 2,590. The markets are experiencing notable volatility, and this suggests that traders are in need of some direction, or at least, a more predictable environment. – Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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2:25 PM EDT - Investors awoke this morning to a one-two punch of negative news developments that have rocked the stock market. Specifically, the President, angered by a mounting trade shortfall with China, has threatened to impose an additional $100 billion in tariffs on goods imported from that emerging economic powerhouse.

Also, at 8:30 (EDT), the U.S. labor Department reported that our nation had added just 103,000 new jobs in March, less than a third of the February total, and well below expectations for 173,000 new positions last month.

Together these twin developments have contributed to an afternoon meltdown in the equity market. In all, as we move inside the final two hours of trading, the Dow Jones Industrial Average is now off 575 points; the S&P 500 Index is lower by 53 points; and the NASDAQ is in the minus column by 134 points. Even some reassuring words from Federal Reserve Chair Jerome Powell in which he noted that the lead bank would continue to follow a gradual monetary tightening approach has failed to stop the selling. – Harvey S. Katz, CFA  

 At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - Fresh off a bullish turnaround on Wednesday, in which the stock market plunged initially before making an afternoon turnaround, which wiped out the aforementioned losses and then some, equities bounded ahead strongly in trading yesterday morning. To wit, the market, dragged down by trade war fears on the middle trading day of the week, with the Dow Jones Industrial Average sinking by some 500 points initially, came storming back later in the day to end matters with the Dow up by better than 230 points. The big recovery came after it had begun to look as though China and the United States might be open to negotiations on trade.      

Then, yesterday morning, we saw the Dow leap ahead by more than 200 points in the first hour of trading, being joined at the time by further moderate improvement in the S&P 500 and S&P 400 Indexes and the NASDAQ. Leading the way higher were big tech names, including the semiconductors. Some high-profile industrial stocks, including Boeing (BA - Free Boeing Stock Report), also did well, snapping back nicely from reversals earlier in the week. This wild stretch, and the Street's seeming acceptance of the fact that material swings might be here to stay, are helping to underpin investor sentiment.  

Overall, the markets have been on edge in recent days on concerns that our country and China might be on the verge of a serious trade war. In fact, on Wednesday, after China announced it might retaliate with tariffs on 106 U.S. products, including cars and chemicals, stocks swooned before staging their late-day comeback after the Administration tried to play down trade-war worries. Then, yesterday, we saw an extension of the rally, led, as noted, by the large-cap stocks on the 30-stock Dow Jones Industrial Average. Meantime, there was economic news released, but, apparently, to little aggregate effect. To wit,

The Commerce Department noted that the nation's trade gap rose to $57.6 billion in February from $56.7 billion the month before. The wider deficit resulted from the fact that imports rose more than exports in the middle month of the first quarter. In other news, the Labor Department reported that weekly jobless claims jumped to 242,000 in the seven days to March 31st. That was well above the prior week's 215,000 total and higher than expectations. As noted, though, there was little reaction to either report, as investors were focused on the just-issued monthly non-farm payroll data, which we discuss below.     

The market then continued to press higher as the morning wound down and the Street looked ahead to the jobs report. Thereafter, things really got going as we headed into the early afternoon, with the Dow's advance passing the 350-point mark briefly, before a little selling ensued cutting the Dow's upturn to fewer than 150 points. But that would be the afternoon's low point, and stocks regrouped soon thereafter, pushing the blue chip composite back up by more than 300 points once again. The Dow remained the day's leader, followed by the S&P 500. The NASDAQ lagged somewhat, meantime.

Things settled down slightly as the closing bell sounded, with the Dow's advance coming in at 241 points, while the S&P 500 Index and the NASDAQ holding firm with advances of 18 and 34 points, respectively. Now, looking at the market thus far today, we see that the major indexes were mixed to lower in Asia overnight, on heightened trade fears, while the European bourses are headed notably lower so far this morning on those same trade concerns. In other news, Treasury yields, which jumped to 2.83% in late dealings yesterday, are now passing hands at 2.81%. Finally, after the release of the key jobs data, and following the growing likelihood of a trade conflict with China, the U.S. equity futures are heading sharply lower just before the start of the trading day.

As to the jobs report, the government indicated that non-farm payrolls, which had been expected to increase by 173,000 in March, came in with an advance of just 103,000. And the jobless rate, expected to dip from 4.1% to 4.0%, held at 4.1%. In other aspects of the report, the government noted that average hourly earnings increased by eight cents for the latest month and by 2.7% for the past 12 months. Meantime, January payrolls were revised downward from an increase of 239,000 to one of 176,000. However, the February tally was revised higher, rising from 313,000 to 326,000. Also, the labor-force participation rate eased to 62.9% in March, from 63.0% in February. In sum, this was a disappointing report. Our sense, though, is that Wall Street is now paying attention to trade matters over employment. And China's suggestion that it would not hesitate to make a major response to any new U.S. tariffs is giving the Street a new case of the jitters this morning.   - Harvey S. Katz, CFA 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.