The U.S. stock market experienced its largest one week drop of the year amid pessimism surrounding a U.S. and China trade deal and underwhelming jobs data.  Interest rates fell as the 10-year treasury yield dropped by 12 basis points to 2.63%.  The spread between the 10-year treasury yield and the 2-year treasury yield fell by 4 basis points to 0.17%.  The price of gold rose 0.35% to $1,298.6 an ounce while the U.S. Dollar Index (DXY) rose from 96.46 to 97.37 amid the lower than expected jobs report.  The price of crude oil rose 0.52% to $56.04 a barrel.

Index               Started Week         Ended Week         Change         Change %         YTD %
DJIA 25,764.0025,585.69-178.31-0.69%9.68%
Nasdaq 7,816.287,637.01-179.27-2.29%15.10%
S&P 500 2,859.532,826.06-33.47-1.17%12.73%
Russell 2000 1,535.761,514.11-21.65-1.41%12.28%

This Week’s Economic Highlights

  • New home sales jumped 3.5% in December to a seasonally adjusted annual rate of 621,000.  However, new home sales are still down 2.4% from where they were a year ago.  The median sales price of new homes in December was $318,600, which is 7% lower than it was a year ago.
  • The U.S. trade deficit in goods and services reached its 10-year high of $59.8 billion in December as it increased by a significant 19%.   More specifically, imports rose 2.1% to $264.9 billion while exports fell 1.9% to $205.1 billion.  The U.S. trade deficit with China is also increasing as it is up nearly 12% from a year ago.
  • Initial unemployment claims fell by a very moderate 3,000 to 223,000 for the week ending March 2nd.  The number of continuing unemployment claims, which lag initial claims by a week dropped by 50,000 to a total of 1.76 million.
  • The U.S. added a modest 20,000 jobs in February, marking its smallest increase in nearly a year and a half.  Meanwhile the unemployment rate dropped from 4.0% to 3.8% as government workers reenter the workforce after the government shutdown.  Wage growth, as measured by average hourly earnings, is up 0.4% on the month and 3.4% on the year.
  • Housing starts soared 18.6% in January to an annual rate of 1.23 million.  However, housing permits (a forward-looking indication of housing starts) only rose 1.4% to an annual rate of 1.35 million.

Quote

“If all economists were laid end to end, they’d never reach a conclusion.”

– George Bernard Shaw

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