The three major indices pointed to a second straight day of steep declines, as volatility continued to rattle risk assets.
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10:20 a.m. ET: Crude sinks to near 3-year lows after OPEC deal fails
The meeting of oil-producing countries ended without a deal, which has sent crude (CL=F) reeling to under $44, its lowest since June 2017.
Oil has been under intense downward pressure from expectations that the coronavirus epidemic would hammer global demand (especially with airlines canceling or curtailing flights). But OPEC+’s desire to backstop prices with a production cut was hampered by resistance from Russia and Saudi Arabia — the two largest and most powerful members.
10:10 a.m. ET: ‘For what it’s worth the February job market was booming’
Rarely, if ever, has one of the market’s most closely-watched data series been rendered so irrelevant by events.
In a different time the jobs data would have sparked a massive rally: Instead, the coronavirus crisis has completely overtaken market psychology — something JPMorgan’s Michael Feroli expects may compel the Fed to push rates “all the way to zero.”
Among the report’s good news:
… there was a large gain in government jobs again last month, up 45,000, mostly at the state and local level. In the private sector goods-producing jobs were up 61,000 last month—the most in just over a year—led by a 42,000 increase in construction employment. Service sector job growth was paced by a 51,000 increase in leisure and hospitality employment; presumably this industry will get decimated in March. The increase in the all-worker workweek was matched in the production and non-supervisory worker series, which ticked up to 33.7 hours. Likewise, average hourly earnings for this better-measured subset of overall employment increased 0.3% last month, leaving the year-ago reading unchanged at 3.3%.
Capital Economics also sums it up nicely:
All of this data precede the coronavirus impact, however, so the markets will largely ignore it. With the 10-year Treasury yield slumping to a new record low and stock markets under pressure again today, it is questionable whether the Fed can wait until its scheduled meeting mid-month to deliver the next rate cut.
9:32 a.m. ET: Stocks open lower even after blowout jobs report
Overnight losses carried into regular trading, with each of the S&P 500, Dow and Nasdaq opening sharply lower Friday morning.
Here were the main moves in markets as of 9:32 a.m. ET:
S&P 500 (^GSPC): 3,908.00, down -107.5 points or -3.56%
Dow (^DJI): 25,217.00, down -843.00 or -3.23%
Nasdaq (^IXIC): 8,325.00, down -323.75 or -3.74%
Crude oil (CL=F): $44.21, down 1.69 or -3.68%
Gold (GC=F): $1,685.20, up $17.20 or +1.03%
10-year Treasury (^TNX): yielding 0.704%, down 22.1 basis points
9:11 a.m. ET: ‘This could be the last perfect employment report the market gets for some time,’ economist says
As many economists have been quick to point out, the February jobs report was obsolete since even before its release, as it captured the period before the coronavirus outbreak escalated and became a meaningful threat to economic activity.
“This could be the last perfect employment report the market gets for some time,” Chris Rupkey, chief financial economist for MUFG Union Bank, wrote in a note Friday. “Net, net, the employment report was nearly perfect in February before the growing economic storm posed by the spreading coronavirus around the country that threatens many industries where the public gathers from movies, to travel, to the airline industry, even shops and malls.”
“The Federal Reserve cut rates this week because of a material change in the outlook as posed by the spread of the virus,” Rupkey added. “Although there is nothing in the February employment report to suggest a slowdown in the economy, the market continues to bet big on another interest rate cut from Fed officials later this month.”
At the same time, the strong employment report means the U.S. economy was in a better position to handle the coronavirus outbreak than it would have been in absence of such momentum at the start of the year, other pundits pointed out.
“It is a good thing, not a bad thing that the US economy ran into the coronavirus on a strong footing,” Neil Dutta, head of economics at Renaissance Macro Research, said in an email Friday. “Yes, this was stale. But the economy is dealing with this from a position of strength.”
8:49 a.m. ET: Markets continue to trade lower, yields tumble
The better-than-expected U.S. jobs reported didn’t really move the needle on markets.
S&P 500 futures (ES=F): 2,934.25, down 81.25 points or -2.69%
Dow futures (YM=F): 25,412.00, down 648 points or -2.49%
Nasdaq futures (NQ=F): 8,389.25, down 259.50 points or -3.00%
Crude oil (CL=F): $44.03 per barrel, down $1.87 or 4.07%
Gold (GC=F): $1,674.80 per ounce, up $6.80 or 0.41%
10-year Treasury (^TNX): yielding 0.751%, down 18.9 bps
8:30 a.m. ET: U.S. jobs report smashes expectations.
U.S. employers added 273,000 payrolls in February, beating economists’ expectations for 175,000. The unemployment rate fell to 3.5% from 3.6% the month prior.
Average hourly earnings climbed by 0.3% month-over-month, or 3.0% year-over-year, which was in line with expectations.
Note: the measurement period for this report predates the period during which coronavirus fears spiked globally.
Read more about the jobs report here.
7:49 a.m. ET: Stock futures sink, following global equities lower
U.S. stocks were on track for another down day, with futures for each of the S&P 500, Dow and Nasdaq off more than 2% in early trading.
In the U.S., the number of confirmed cases of COVID-19 broke above 200, with the White House acknowledging Thursday that the nation lacks an adequate amount of coronavirus test kits to meet demand. Globally, the number of cases of the coronavirus is nearing 100,000, with more than 3,200 deaths reported.
The escalating outbreak has dented stocks and sent Treasury yields spiraling lower. The yield on the benchmark 10-year note broke below 0.75% Friday morning as traders piled into safe haven assets like government bonds.
The impending release of Department of Labor’s February jobs report has done little to prop up equities, even as consensus economists expect another strong print on payroll gains and an unemployment rate near a 50-year low. The release, however, will capture the state of the labor market before the escalation of the coronavirus outbreak in the U.S., rendering the report already stale.
Here were the main moves during the pre-market session, as of 7:49 a.m. ET:
S&P 500 futures (ES=F): 2,939.25, down 76.75 points or -2.53%
Dow futures (YM=F): 26,449.00, down 611 points or -2.34%
Nasdaq futures (NQ=F): 8,407.50, down 241.25 points or -2.79%
Crude oil (CL=F): $43.95 per barrel, down $1.95 or 4.25%
Gold (GC=F): $1,686.00 per ounce, up $18.00 or 1.08%
10-year Treasury (^TNX): yielding 0.739%, down 18.6 bps
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