After The Close - The stock market started trading lower today, continuing its four-day slide, as the European Central Bank cut the growth forecast for the European Union over the coming year. This took a toll on investor sentiment, and caused the Dow Jones Industrial Average to fall by as many as 321 points in the early portion of the trading session. The other indices fell in tandem, and the overall market was considerably lower. However, the indices started to rebound through the middle portion of the day, as an oversold condition was hit, and stock prices showed some recovery for a time. Still, trading was weak, and, overall, prices finished closer to the lows of the session than not. Overall, the Dow closed down 202 points, the S&P 500 was lower by 23 points, and the NASDAQ fell 84 points.

Additionally, market breadth was rather negative as decliners outpaced advancers by a 2.4-to-1.0 ratio. Interest-sensitive sectors, such as utilities and REITs, were among the best performers on the day. However, financial equities were among the weakest, partially hurt by reduced interest rates.

In commodity news, oil prices were mildly higher, as OPEC announced some supply cuts to production. In addition, U.S. Treasury bond yields were lower today, as a flight to safe-haven assets occurred. Meantime, the VIX Volatility Index rose quickly, as demand for options protection gained.

Looking ahead, the top story tomorrow will be both the nonfarm payrolls report and unemployment rate for February, which should be an important indicator of how the U.S. economy is doing. In addition, housing starts and building permits for January are slated for release, and will show if follow through has occurred since December’s solid new home sales data. On the earnings front, tomorrow should be relatively quiet, suggesting that trading will focus mostly on economic news and any trade developments. - John E. Seibert III

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


Before The Bell - After suffering back-to-back setbacks to begin the first full week of trading on Wall Street--the second of which was just a modest reversal--the stock market commenced the session yesterday in mixed fashion. On point, after the first few minutes of trading, the Dow Jones Industrial Average was heading slightly higher, while the S&P 500 Index and the NASDAQ were moving lower. As we passed the half-hour mark of trading, though, the Dow had joined the other two indexes and the small-cap Russell 2000 in the red. None of the moves were material at first, and this seemed to be one more uneven session moving into place.

As to influences on trading, several Administration figures claimed that the United States and China were on the cusp of hammering out a trade deal. Those sources claimed that such an agreement could be formalized at a late-month get together. Expectations that the two sides will strike such an accord have been critical in getting the U.S. stock market off to a strong start this year following a woeful end to 2018. At the same time, some suggest that the equity market's softness this week might just reflect the fact that a trade deal; may already be factored into the level of prices.

Be that as it may, stocks were also being influenced by economic news. And such tidings were a mixed bag yesterday. For example, data issued before the stock market opened showed that Automatic Data Processing's (ADP) non-farm employment rolls increased by 183,000 last month. That was a bit shy of the 189,000 forecast. However, figures for January were revised upwards. Tomorrow, the Labor Department will issue its employment report for February. Forecasts are that job growth eased from 304,000 in January to 185,000 last month. Also, of note, economists expect the unemployment rate to have fallen from 4.0% to 3.9%.

Meanwhile, in another key report, the U.S. Census Bureau reported that the U.S. international trade deficit increased in December--the last month for which such figures are available--jumped to $59.8 billion, up $9.5 billion from November's tally of $50.3 billion. Expectations had been for a lesser gain, to $56.9 billion. That rise in the deficit is likely to pressure revised fourth-quarter GDP growth, which currently stands at 2.6%. These reports, however, did not seem to have a major influence on trading. As to stocks, the market passed the one -hour mark of trading with the Dow and the NASDAQ off by 45 points and 30 points, respectively.

The Dow then would fall to a loss of about 100 points before putting in recovery as we approached the end of the morning, before it began the long attempt to recover. The Dow's losses steepened as the afternoon began, with that index's deficit surpassing 170 points at one time. The NASDAQ's loss, meantime, would top 70 points before a rally attempt would ensue as we moved further into the afternoon. The red ink then would continue to flow as the minutes to the close continued. As has been so for the week to date, it continued to be a case of waiting for a trade deal to emerge.

Nothing much transpired over the final hour of trading, with the market staying lower, but not pushing down to session lows as the final minutes ticked down. In all, at the close, the Dow was down 133 points; the S&P 500 Index had fallen by 18 points; and the NASDAQ was lower by 70 points. But those losses were materially smaller than the closing deficits on the smaller-cap Russell 2000 and the S&P Mid-Cap 400. Overall, it was a difficult day for the bulls as there seems to be some inability to break through to higher levels in the absence of a concrete deal on trade.

Now, after yesterday's moderate-sized reversal in the market, we see that the major indexes were generally lower in overnight trading in Asia. In Europe, the leading bourses also are tracking downward at this hour. Also, oil prices are rising again on OPEC supply cuts and Treasury note yields, which ticked just below 2.70% in late trading yesterday, are now at 2.68%. Finally, one day ahead of the critical Labor Department release on non-farm payrolls, the U.S. equity futures are suggesting a lower opening when trading resumes later this morning on trade deficit worries. – Harvey S. Katz, CFA

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