The Market Week in Review

After a highly volatile week the U.S. stock market ended slightly higher as investors digest the developments of the coronavirus outbreak.  However, interest rates continue to fall as the 10-year treasury yield fell from 1.13% to 0.71%.  Meanwhile, the price of gold rose 5.5% to $1,674 an ounce as investors flee to the haven metal.  The price of crude oil fell 8.2% to $41.57 a barrel amid news that Russia would not agree to follow along with OPEC’s oil production cuts.

THIS WEEK’S ECONOMIC HIGHLIGHTS

  • The U.S. federal reserve decided to cut the feds funds rate by 0.50% ahead of their March meeting in hopes to combat the impact that the coronavirus may have on the U.S. economy.  Fed Chairman, Jerome Powell, stated that the U.S. economy remains strong but “saw a risk to the outlook, and we chose to act”.

  • U.S. manufacturing slowed in February as the ISM manufacturing index dropped from 50.9% to 50.1%.  (Readings above 50% indicate that the manufacturing index as a whole is expanding.)  U.S. manufacturers have been struggling since the end of 2018 as trade tensions between the U.S. and China hampered growth, but more recently the coronavirus has impaired their ability to get imported supplies.

  • The ISM non-manufacturing index, a measure of service-orientated companies, rose from 55.5% in January to 57.3% in February.  (Readings greater than 50% indicate an expanding service sector, and readings greater than 55% are deemed exceptional.)  Although impacts of the coronavirus have not seemed to materialize in the ISM non-manufacturing index as of yet, worries may foreshadow troubles ahead.

  • Initial unemployment claims fell by 3,000 to 216,000 for the week ending February 29th, meanwhile its more stable four-week average rose by 3,250 to 213,000.  Continuing unemployment claims, which lags initial claims by a week, were little changed and currently sits at a historically low 1.73 million.

  • The U.S. added 273,000 jobs in February, pushing the unemployment rate down from 3.6% to 3.5%.  At the same time wage growth, as measured by the average hourly rate, rose 0.3% to $28.52 an hour.  Over the past year the average hourly wage has risen a strong 3.0%.

Quote

“The report of my death was an exaggeration.”

     – Mark Twain

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