Market Insights 3/10/2020

U.S. equities rebounded from Monday’s tumble to finish higher in a volatile session that saw 1,000+-point swings in both directions for the Dow throughout the day, amid increased expectations that a fiscal policy response to the coronavirus outbreak may be on the horizon.

President Donald Trump met with Congressional members today and pitched the possibility of a payroll tax cut to aid in the uncertainty surrounding the extraordinary turmoil as of late, with a press conference set for after today’s close.

Crude oil prices also recovered some of yesterday’s plunge after Russia suggested that it may be open to resuming talks with Saudi Arabia, which boosted production in reaction to Russia’s resistance of OPEC’s proposed production cuts last week that ignited an oil price war and tanked crude prices.

Treasury yields bounced off a recent tumble to all-time lows and the U.S. dollar pared yesterday’s drop, with a modest increase in small business optimism in February the only item of note on the economic calendar.

Gold traded sharply lower. Europe turned lower amid the continued coronavirus uneasiness within in the region, but markets in Asia were higher.

The Markets…

The Dow Jones Industrial Average rallied 1,167 points (4.9%) to 25,018

The S&P 500 Index jumped 136 points (4.9%) to 2,882

The Nasdaq Composite climbed 394 points (5.0%) to 8,344

In heavy volume, 1.8 billion shares were traded on the NYSE and 4.3 billion shares changed hands on the NASDAQ

WTI crude oil gained $3.23 to $34.36 per barrel and wholesale gasoline was up $0.02 to $1.16 per gallon

The Bloomberg gold spot price fell $34.17 to $1,646.30 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—jumped 1.6% to 96.45

The stock markets, crude oil prices, Treasury yields and the U.S. dollar all recovered some of yesterday’s decisive tumbles that came as the amplified economic and earnings uncertainty regarding the spreading of the coronavirus was met with a crash in oil prices as a price war erupted after Saudi Arabia pledged to boost production on the heels of Russia’s resistance of OPEC’s proposed production cuts.

Treasuries gave back some of yesterday’s strong rally, as the yield on the 2-year note was up 20 bps at 0.53%, the yield on the 10-year note gained 29 bps to 0.79%, and the 30-year bond rate advanced 39 bps to 1.31%.

Expectations are running high that the Fed and other global central banks may deploy further stimulus measures after the Fed’s surprising 50 basis point rate cut last week and ahead of this week’s monetary policy decision from the European Central Bank (ECB).

Europe lower amid continued uncertainty, Asia rebounds

European equities finished lower, adding to yesterday’s sharp drop, as the markets reversed course with increased attention on the spreading coronavirus turning to Europe. Crude oil prices and bond yields rebounded from decisive tumbles as monetary and fiscal support expectations rise, aimed at combating the impact of the spreading coronavirus outbreak.

Switzerland’s Swiss Market Index finished little changed, while the U.K. FTSE 100 Index was down 0.1%, Germany’s DAX Index declined 1.4%, France’s CAC-40 Index lost 1.5%, Spain’s IBEX 35 Index fell 3.2% and Italy’s FTSE MIB Index decreased 3.3%.

Stocks in Asia mostly rebounded from yesterday’s sharp drop as a price war in the oil market joined festering concerns regarding the impact of the spreading coronavirus.

Japan’s Nikkei 225 Index rose 0.9%, China’ Shanghai Composite Index increased 1.8%, and the Hong Kong Hang Seng Index gained 1.4%. Australia’s S&P/ASX 200 Index rallied 3.1% and South Korea’s Kospi Index traded 0.4% higher. Markets in India were closed for a holiday.