Dow tumbled 366, decliners over advancers 2-1 & NAZ & gave back 89. The MLP index dropped 2+ to the 237s & the REIT index went up 2+ to the 236s. Junk bond funds slid lower & Treasuries advanced while stock were being sold. Oil fell 1+ to the 62s & gold rose 8 to 1345, nearing the high end of its recent trading range.
AMJ (Alerian MLP Index tracking fund)
Fears of a trade war between the world's 2 largest economies returned to haunt markets, mauling US stocks & sending investors into haven assets from Treasuries to gold. The S&P 500 tumbled thru its average price for the past 200 days, with all 11 sectors lower after China said it would levy 25% tariffs on imports of 106 US products including soybeans, automobiles, chemicals & aircraft. Semiconductor shares fell nearly 3%. The Volatility Index jumped to 23.55, about double its level for the past year. Markets have been buffeted in recent weeks by everything from a volatility spike & a tech selloff to fears of an all-out trade war, & developments today suggest there may be more turbulence to come. Investors are having to weigh the growing protectionist rhetoric between the US & China against the chances of measures having a meaningful effect on the still-upbeat global growth picture. Inflation data from Europe matched estimates & the € stayed higher. West Texas oil fell as commodities were roiled by the growing trade dispute, while emerging-market stocks tumbled & their currencies dropped.
Specter of Full Trade War Batters Stocks
China announced additional tariffs on 106 US products, in a move likely to heighten global concerns of a trade war between the world's biggest economies. The effective start date for the new charges was not announced, though China's Ministry of Commerce said the tariffs are designed to target up to $50B of US products annually. The 25% levy on US imports includes products such as soybeans, cars & whiskey. The move comes less than 24 hours after Pres Trump unveiled a list of Chinese imports that he aims to target as part of a crackdown on what he deems as unfair trade practices. Sectors covered by Trump's proposed tariffs include products used for robotics, information technology, communication technology & aerospace. The trade showdown between the 2 countires has rattled investors & fueled market fears that the dispute could soon spiral into a full-blown trade war. China's proposed countermeasures prompted US stocks to tumble. The Dow tanked, with Boeing (BA) & Caterpillar (CAT) leading all stocks in the index lower. Meanwhile, the announcement also prompted euro stocks to extend losses, with the pan-European Stoxx 600 hitting a session low of 0.8% shortly after the news.
China announces new tariffs on 106 US products, including soy, cars and chemicals
Growth in US service industries cooled in Mar for a 2nd month as orders settled back from the fastest pace in more than 12 years, a survey from the Institute for Supply Management showed. Non-manufacturing index fell to 58.8 (est 59) from Feb's 59.5 (readings above 50 indicate growth). New orders measure slid to 59.5 from 64.8 (which was highest since 2005). Gauge of business activity dropped to 60.6 from 62.8. The employment index increased to 56.6 from 55. Even with the main index's decline last month, service industries continued to expand at a hearty pace. An increase in order backlogs & slower delivery times, as measured by the purchasing managers' group, encouraged the services sector to step up hiring to meet demand. The results are similar to the group’s data earlier this week that showed factories expanded at a slightly slower pace as orders & production growth cooled. Nonetheless, both reports indicate the economy remains on solid footing, & the services gauge's 3-month average of 59.4 is the best for a qtr in records back to 1997. The services index covers about 90% of the economy & spans industries such as retail, utilities, health care & construction. A tight job market & elevated confidence are supporting demand for services, even as rising input prices threaten companies' profit margins. In addition, a brewing trade war between the US & China represents a possible headwind for the outlook. Index of supplier deliveries rose to 58.5, the highest since 2005, from 55.5 (readings above 50 indicate slower deliveries). The measure of order backlogs climbed to 56.5, strongest reading since May, from 56.
Companies added more workers than forecast to US payrolls in Mar, signaling the job market remains robust, according to data released from the ADP Research Institute. Private payrolls rose 241K (est 210K) after upwardly revised 246K gain in Feb. Payrolls in goods-producing industries, which include builders and manufacturers, rose 65K after a 42K rise. Service providers added 176K jobs to payrolls following 204K in Feb. The 4-month average gain of close to 245K is the strongest stretch since late 2014. The results are a positive sign for official data on private payrolls, which will be released Fri by the Labor Dept. The estimate for that figure is 190K, after a 287K gain in Feb. The ADP report shows the job market remains solid, which bodes well for consumer spending. Gains in business investment mean companies are likely to keep hiring, though employers continue to say there’s a shortage of skilled workers. “The job market is rip-roaring. Monthly job growth remains firmly over 200,000, double the pace of labor force growth. The tight labor market continues to tighten,” Mark Zandi, chief economist at Moody's Analytics, said (Moody’s produces the figures with ADP). Hiring in construction rose by 31K in Mar & factories added 29K workers. Professional & business services added 44K to their workforces while education & health services added 28K workers. Companies employing 500 or more workers increased staffing by 67K jobs, payrolls rose by 127K at medium-sized businesses & those with 50-499 employees & small companies’ payrolls rose by 47K.
Good news from the economy does little to calm investor fears about a growing trade war between the US & China. The Dow is essentially at a 4+ month low & the short-term outlook is gloomy, to say the least. One divergence from the selling has been REITs. They are largely unaffected by trade war fears & many have high yields, something investors like to see in these troubled times. Nervous investors are attracted to gold & Treasuries, considered "safe haven" investments.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 62.19 | -1.32 | -2.1% |
| GC=F | Gold | 1,346.10 | +8.80 | +0.7% |
Fears of a trade war between the world's 2 largest economies returned to haunt markets, mauling US stocks & sending investors into haven assets from Treasuries to gold. The S&P 500 tumbled thru its average price for the past 200 days, with all 11 sectors lower after China said it would levy 25% tariffs on imports of 106 US products including soybeans, automobiles, chemicals & aircraft. Semiconductor shares fell nearly 3%. The Volatility Index jumped to 23.55, about double its level for the past year. Markets have been buffeted in recent weeks by everything from a volatility spike & a tech selloff to fears of an all-out trade war, & developments today suggest there may be more turbulence to come. Investors are having to weigh the growing protectionist rhetoric between the US & China against the chances of measures having a meaningful effect on the still-upbeat global growth picture. Inflation data from Europe matched estimates & the € stayed higher. West Texas oil fell as commodities were roiled by the growing trade dispute, while emerging-market stocks tumbled & their currencies dropped.
Specter of Full Trade War Batters Stocks
China announced additional tariffs on 106 US products, in a move likely to heighten global concerns of a trade war between the world's biggest economies. The effective start date for the new charges was not announced, though China's Ministry of Commerce said the tariffs are designed to target up to $50B of US products annually. The 25% levy on US imports includes products such as soybeans, cars & whiskey. The move comes less than 24 hours after Pres Trump unveiled a list of Chinese imports that he aims to target as part of a crackdown on what he deems as unfair trade practices. Sectors covered by Trump's proposed tariffs include products used for robotics, information technology, communication technology & aerospace. The trade showdown between the 2 countires has rattled investors & fueled market fears that the dispute could soon spiral into a full-blown trade war. China's proposed countermeasures prompted US stocks to tumble. The Dow tanked, with Boeing (BA) & Caterpillar (CAT) leading all stocks in the index lower. Meanwhile, the announcement also prompted euro stocks to extend losses, with the pan-European Stoxx 600 hitting a session low of 0.8% shortly after the news.
China announces new tariffs on 106 US products, including soy, cars and chemicals
Growth in US service industries cooled in Mar for a 2nd month as orders settled back from the fastest pace in more than 12 years, a survey from the Institute for Supply Management showed. Non-manufacturing index fell to 58.8 (est 59) from Feb's 59.5 (readings above 50 indicate growth). New orders measure slid to 59.5 from 64.8 (which was highest since 2005). Gauge of business activity dropped to 60.6 from 62.8. The employment index increased to 56.6 from 55. Even with the main index's decline last month, service industries continued to expand at a hearty pace. An increase in order backlogs & slower delivery times, as measured by the purchasing managers' group, encouraged the services sector to step up hiring to meet demand. The results are similar to the group’s data earlier this week that showed factories expanded at a slightly slower pace as orders & production growth cooled. Nonetheless, both reports indicate the economy remains on solid footing, & the services gauge's 3-month average of 59.4 is the best for a qtr in records back to 1997. The services index covers about 90% of the economy & spans industries such as retail, utilities, health care & construction. A tight job market & elevated confidence are supporting demand for services, even as rising input prices threaten companies' profit margins. In addition, a brewing trade war between the US & China represents a possible headwind for the outlook. Index of supplier deliveries rose to 58.5, the highest since 2005, from 55.5 (readings above 50 indicate slower deliveries). The measure of order backlogs climbed to 56.5, strongest reading since May, from 56.
Growth in U.S. Service Industries Cools for a Second Month
Companies added more workers than forecast to US payrolls in Mar, signaling the job market remains robust, according to data released from the ADP Research Institute. Private payrolls rose 241K (est 210K) after upwardly revised 246K gain in Feb. Payrolls in goods-producing industries, which include builders and manufacturers, rose 65K after a 42K rise. Service providers added 176K jobs to payrolls following 204K in Feb. The 4-month average gain of close to 245K is the strongest stretch since late 2014. The results are a positive sign for official data on private payrolls, which will be released Fri by the Labor Dept. The estimate for that figure is 190K, after a 287K gain in Feb. The ADP report shows the job market remains solid, which bodes well for consumer spending. Gains in business investment mean companies are likely to keep hiring, though employers continue to say there’s a shortage of skilled workers. “The job market is rip-roaring. Monthly job growth remains firmly over 200,000, double the pace of labor force growth. The tight labor market continues to tighten,” Mark Zandi, chief economist at Moody's Analytics, said (Moody’s produces the figures with ADP). Hiring in construction rose by 31K in Mar & factories added 29K workers. Professional & business services added 44K to their workforces while education & health services added 28K workers. Companies employing 500 or more workers increased staffing by 67K jobs, payrolls rose by 127K at medium-sized businesses & those with 50-499 employees & small companies’ payrolls rose by 47K.
Companies in U.S. Added 241,000 Workers in March, ADP Data Show
Good news from the economy does little to calm investor fears about a growing trade war between the US & China. The Dow is essentially at a 4+ month low & the short-term outlook is gloomy, to say the least. One divergence from the selling has been REITs. They are largely unaffected by trade war fears & many have high yields, something investors like to see in these troubled times. Nervous investors are attracted to gold & Treasuries, considered "safe haven" investments.
Dow Jones Industrials
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