U.S. Stage Late Recovery Attempt But Still Close Sharply Lower

(RTTNews) - After falling sharply early in the session, stocks remained firmly negative throughout most of the trading day on Friday but staged a notable recovery attempt going into the close. The major averages significantly pared their losses but still closed sharply lower.

The Dow slumped 256.50 points or 1 percent to 25,864.78 after plummeting by nearly 900 points in early trading. The Nasdaq plunged 162.98 points or 1.9 percent to 8,575.62 and the S&P 500 tumbled 51.57 points or 1.7 percent to 2,972.37.

Despite the losses on the day, the major averages finished higher in what was an extremely volatile week. The Dow surged up by 1.8 percent for the week, while the S&P 500 rose by 0.6 percent and the Nasdaq inched up by 0.1 percent.

The early sell-off on Wall Street came as traders continue to worry about the economic impact of the coronavirus outbreak.

Recent data points to a slowdown in new coronavirus infections in China, but the disease seems to be spreading more rapidly around the rest of the world.

So far, more than 100,000 infections have been confirmed worldwide and more than 3,300 people have been killed by the virus.

The worries about the outbreak overshadowed the Labor Department's usually closely watched monthly employment report.

The report showed much stronger than expected job growth in the month of February, although traders view the data as old news as the coronavirus fears have ramped up only recently.

The Labor Department said employment surged up by 273,000 jobs in February, matching the upwardly revised spike in January.

Economists had expected employment to increase by about 175,000 jobs compared to the jump of 225,000 jobs originally reported for the previous month.

With the much stronger than expected job growth, the unemployment rate unexpectedly edged down to 3.5 percent in February from 3.6 percent in January. The rate had been expected to remain unchanged.

"We know the US economy started 2020 on a firm footing, but that won't count for much as spending slows and recession worries mount due to the economic disruption the virus is already causing," said ING Chief International Economist James Knightley.

A separate report released by the Commerce Department showed the U.S. trade deficit narrowed more than expected in the month of January, as the value of imports fell by more than the value of exports.

The Commerce Department said the trade deficit narrowed to $45.3 billion in January from a revised $48.6 billion in December.

Economists had expected the trade deficit to narrow to $46.1 billion from the $48.9 billion originally reported for the previous month.

Sector News

Energy stocks turned in some of the market's worst performances, moving sharply lower along with the price of crude oil. Crude oil for April delivery plunged $4.62 to $41.28 a barrel after OPEC's allies rejected additional production cuts.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 11.4 percent to a record low, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index sank by 5.9 percent and 4.9 percent, respectively.

Substantial weakness was also visible among banking stocks, as reflected by the 4.5 percent nosedive by the KBW Bank Index. The index fell to its lowest closing level in well over a year amid a continued decrease in treasury yields.

Steel, chemical, software, and housing stocks also saw considerable weakness on the day, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Friday. Japan's Nikkei 225 Index nosedived by 2.7 percent, while China's Shanghai Composite Index slumped by 1.2 percent.

The major European markets also showed substantial moves to the downside on the day. While the French CAC 40 Index plummeted by 4.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index plunged by 3.6 percent and 3.4 percent, respectively.

In the bond market, treasuries moved sharply higher, pushing the yield on the benchmark ten-year note down to a new record closing low. The yield on the ten-year note, which moves opposite of its price, plunged by 22 basis points to 0.706 percent.

Looking Ahead

News on the coronavirus front is likely to remain in focus next week, overshadowing reports on consumer and producer prices, import and export prices, and consumer sentiment.