Newsletter – Mar 2020

As we enter into the 2020 New Year, GFF Brokers would like to take a moment to thank you for allowing us the opportunity to earn your business. We wish you a successful New Year!!!

 

Upcoming Government Reports & Holidays

 

Mar 02 CONSTRUCTION SPENDING REPORT
Mar 05 MANUFACTURERS’ SHIPMENTS, INVENTORIES & ORDERS REPORT
Mar 06 US INTERNATIONAL TRADE IN GOODS & SERVICES REPORT
Mar 06 EMPLOYMENT SITUATION REPORT
Mar 06 MONTHLY WHOLESALE TRADE: SALES & INVENTORIES REPORT
Mar 11 CONSUMER PRICE INDEX REPORT
Mar 12 QUARTERLY SERVICES SURVEY
Mar 12 PRODUCER PRICE INDEX REPORT
Mar 17 ADVANCE MONTHLY SALES FOR RETAIL & FOOD SERVICES REPORT
Mar 17 MANUFACTURING AND TRADE: INVENTORIES & SALES REPORT
Mar 18 NEW RESIDENTIAL CONSTRUCTION REPORT
Mar 23 QUARTERLY FINANCIAL REPORT – RETAIL TRADE
Mar 24 NEW RESIDENTIAL SALES REPORT
Mar 26 GROSS DOMESTIC PRODUCT ADVANCE ESTIMATE REPORT
Mar 26 ADVANCE ECONOMIC INDICATORS REPORT

 

Key Events That Moved the Market in Feb. 2020

The following is a review of US and world events from the last month. Please be advised that this content is based upon the opinions and research of GFF Brokers and its staff and should not be treated as trade recommendations.

 

S&P 500 Index Daily Chart from February 3 – February 21, 2020

February 3

  • The broader stock market recovered from their steep sell-off last Friday but coronavirus fears linger across the market.
  • China took measures to reduce the impact of the epidemic on its economy, lowering reverse repo rates by 10 basis points.
  • China also made a liquidity injection worth $171 billion (1.2 trillion yuan) to limit the negative economic impact of business and travel shutdowns.
  • The ISM manufacturing index showed improvement and strength coming in at 50.9, beating consensus expectations of 48.7.
  • The PMI manufacturing index at 51.9 showed a boost in production and employment. New orders were expected to be flat, consensus falling to 51.7. The actual numbers beat consensus slightly.
  • Construction spending is down -0.2%, missing growth expectations of 0.5%. However, year-over-year from the current reporting date shows a growth of 5.0%.

February 4

  • The broader market momentum picked up after a day of recovery in yesterday’s session.
  • Speculation that the global economy may be resilient in the face of coronavirus due to current accommodative monetary measures may have boosted market sentiment.
  • China released reports indicating that their global manufacturing is steady as their central bank injects liquidity into their banking system.
  • December factory orders in the US came in higher at 1.8% (beating economist expectations of 1.3%) but this growth was skewed by orders for defense aircraft. Orders for all other core capital goods fell.

February 5

  • A dramatic move in the Dow, S&P 500, and Nasdaq Composite today–all indices had a massive surge, entering record-high territory, erasing losses due to coronavirus fears.
  • Much of the optimism was due in part to news that a coronavirus treatment may be on the horizon.
  • However, the Word Health Organization played down this report, stating that no such therapeutic currently exists.
  • The ADP employment change report showed 291,000 private-sector jobs were created in January–the largest gain in four years. This figure beat economist forecasts of a gain of 154,000.
  • The US international trade deficit widened slightly in December to -$48.9 billion as compared when -$48.2 billion was expected.
  • January’s Institute for Supply Management non-manufacturing index showed steady growth at 55.5, beating analyst forecasts of 55.2.

February 6

  • Stocks hit record highs before pulling back as China announced that it would halve its tariffs on $75 billion worth of US products.
  • Strong Q4 corporate earnings also gave indexes a major boost.
  • Jobless claims in the week ended February 1 edged lower to 202,000 when 215,000 claims were expected.
  • U.S. nonfarm productivity rose 1.4%, slightly under consensus expectations of 1.5%.

February 7 (intraday)

  • Writing intraday, the Dow just dropped 150 points on fears that the coronavirus epidemic may dramatically slow the Chinese economy.
  • Investors are beginning to sell despite stronger-than-expected US jobs data.
  • While economists expected steady growth in January non-farm payrolls to the tune of 160,000, instead they got a surprise figure of 225,000. Nevertheless, coronavirus fears dampened optimism that might have boosted markets on the jobs numbers (at least temporarily).

February 10

  • There were no scheduled economic releases today.
  • Stock indexes edged lower as traders assess the potential economic implications of the coronavirus outbreak.
  • Later today, the White House will release its economic projections, including an updated growth forecast, along with a proposed budget for the fiscal year.

February 11

  • The broader market rose due to reports of a slowdown in the number of new coronavirus cases in China. S&P 500 and NASDAQ futures reached record highs.
  • The National Federation of Independent Business small business optimism index was 104.3 when 103.2 was expected.
  • The December Job Openings and Labor Turnover Survey (JOLTS) came in at 6.423 million, lower than consensus expectations of 6.775 million.

February 12

  • Stocks rose to all-time highs, with the Dow jumping 250 points to a hit a record, as investors shook off concerns over how the coronavirus would impact corporate profits and the global economy.
  • Federal Chief Jerome Powell returns to Capitol Hill this morning for a second day of testimony on the economy, monetary policy and financial regulation.

February 13

  • Stocks plunged from their record highs as the markets grapple with a a jump in reported coronavirus cases and the virus’ possible economic impact.
  • The U.S. consumer price index increased 0.1% last month, when a gain of 0.2% was expected and the consumer price index, excluding the often volatile food and energy categories, was up 0.2% as anticipated.
  • Initial jobless claims increased 2,000 in the week ended February 8 to 205,000. Economists expected 210,000 new jobless claims.
  • The number of Americans applying for first-time unemployment benefits advanced slightly last week, but remained at historically low levels.

February 14 (intraday)

  • Mid-day, very little has changed in the markets as investors weigh strong corporate earnings against some not-so-good consumer data.
  • Retail sales excluding autos, gas, building materials and food showed 0.3%, in line with consensus, and unchanged from last month. However, clothing stores experienced their biggest one-month drop since 2009.
  • Industrial production also came in line with consensus at -0.3%.
  • Consumer sentiment came in positive at 100.9, beating economist expectations of 99.7.
  • Around 77% of all S&P 500 companies that have reported earnings–and so far, 72% of them have beat analyst expectations, according to FactSet data.

February 18

  • The Dow Jones fell for a third consecutive day as investors remain focused on the coronavirus breakout.
  • The Empire State Manufacturing Survey, which is compiled by the Federal Reserve Bank of New York, showed business grew in New York in February.
  • The Empire State manufacturing index hit its highest level in nine months at 12.9 when 4 was expected.

February 19

  • The S&P 500 and Nasdaq Composite rose to record highs as the tech sector outperformed while investors continued to weigh the coronavirus’ impact on the global economy.
  • The producer price index, which is a measure of the prices businesses receive for their goods and services, was up a seasonally adjusted 0.5% in January from a month earlier.
  • Economists had expected prices to rise 0.1%.
  • The producer price index, excluding the often-volatile food and energy categories, was also up 0.5% when a gain .0.1% was anticipated.
  • Housing starts in January were 1.567 million when economists estimated 1.420 million.
  • Building permits for new construction hit a 13-year high to of 1.551 million when economists estimated 1.453 million permits

February 20

  • Indexes fell with most of the losses coming from a sudden midday move.
  • Traders could not pinpoint a catalyst for the sudden decline. However, some highlighted technical factors breaking down along with an increased risk-off sentiment stemming from fears of the coronavirus slowing the global economy.
  • Initial jobless claims increased 4,000 in the week ended February 15 to a seasonally adjusted 210,000. This matched the forecast of economists.
  • The economic activity in the manufacturing sector of the Philadelphia area expanded at a strong rate in February.
  • The Philadelphia Federal Reserve manufacturing index jumped to 36.7 when 12.0 was anticipated. This reading is the highest since February 2017.

February 21

  • The Dow dropped 250 points overnight as the number of new coronavirus cases escalated, fueling worries over a pronounced global economic slowdown.

 

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