Stocks had a pretty nice sell-off today.
First, the scoreboard:
Dow: 16,109.2 (-230.8, -1.4%)
S&P 500: 1,846.3 (-21.8, -1.1%)
Nasdaq: 4,260.4 (-62.9, -1.4%)
And now the top stories:
Today’s market-moving news arguably started to pour out overnight in Asia where China’s latest stats on industrial production, retail sales, and fixed asset investment all fell short of expectations. Combined with last weekend’s horrific plunge in exports, economists now see the slowdown in China more clearly, and some have already slashed their GDP growth forecasts. “New leaders are now facing a critical test: whether they can stabilise the economy, without significantly compromising the progress of lowering debt risks,” said Societe Generale’s Wei Yao. “We think that they will try to send clear easing signals but continue to refrain from any big stimulus program. Cutting the required reserve ratio is an option, but it is more a gesture than for real impact.”
Data out of the U.S. was mostly better than expected. Retail sales climbed 0.3% in February, which was higher than the 0.2% gain expected. Similarly, sales excluding autos and gas climbed 0.3%. “As the rise in retail sales in February didn’t get anywhere close to reversing all of the drop in the previous two months, the unusually bad weather is still hurting retailers,” said Capital Economics’ Paul Dales. “Looking ahead, there is clearly scope for more of the demand pent up during the past few months to be released.”
Initial weekly jobless claims fell to 315,000, which was much better than the 330,000 expected by economists. The 4-week moving average fell to 330,500 from 336,750 last week. “Claims data have been volatile dating back to last fall, as factors such as computer system upgrades, seasonal adjustments related to moving holidays, and severe weather all potentially complicated the interpretation of the previously steady downward trend,” said Barclays’ Cooper Howes. “That being said, the 4wma has settled in around where it was last summer before these factors came into play, suggesting that it may be stabilizing.”
It was hours after the economic data was released that we saw risk assets like stocks begin to fall and safe assets like Treasury securities start to rise. “The ignition of the Russia/Ukraine situation has created the bid,” said Tom Tucci, head of U.S. Treasury trading at CIBC World Markets, in an emailed note to clients shortly after noon. “Massive short covering in the last hour after yesterday’s real money buying.” The 10-year Treasury yield fell 9 basis points to 2.64%.
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