U.S. stocks fell Friday, adding to losses from the prior session as investors fled to safe haven assets including gold and Treasuries. Existing home sales data, IHS Markit’s February purchasing managers’ indices for the U.S. and coronavirus developments remained a focus for investors.
10:00 a.m. ET: Existing home sales decline less than expected in January
Existing home sales fell by 1.3% month on month to a seasonally adjusted annual rate of 5.46 million in January, the National Association of Realtors said Friday. This beat consensus economist expectations for a decline of 1.8% to a seasonally adjusted annual rate of 5.44 million expected. In December, existing home sales registered at 5.53 million.
In January, declines were led by a drop in sales of previously owned homes in the West. These fell 9.4% over December. Sales were little changed to flat in the Midwest, South and Northeast.
9:48 a.m. ET: 30-year U.S. Treasury yield hits all-time low
The 30-year U.S. Treasury yield sank more than 7 basis points Friday morning to an all-time low of 1.8904% as of 9:48 a.m. Friday morning, according to Bloomberg data, amid broad-based buying in U.S. government bonds. Yields were lower across the curve, and the yield on the 10-year note remained below that of the shorter-duration 3-month bill.
9:45 a.m. ET: IHS Markit U.S. composite purchasing managers’ index sinks to the lowest level since 2013
The U.S. flash composite purchasing managers’ index (PMI) dropped sharply below expectations and into contractionary territory in February, IHS Markit said Friday. The weakness was led by a slump in the U.S. services sector, as the coronavirus outbreak hit travel and tourism-related industries.
The composite PMI registered at 49.6 for February, coming in well below the print of 53.3 from January and marking the lowest level in seven years. Readings below the neutral level of 50 indicate contraction.
Within the composite print, the manufacturing PMI came in at a six-month low of 50.8, below expectations for 51.5.
The service sector PMI slumped to a more than six-year low of 49.4. Consensus economist had expected this to come in at 53.4, which would have matched January’s level.
Here’s what Chris Williamson, chief business economist at IHS Markit, had to say about the results, according to a statement:
With the exception of the government-shutdown of 2013, US business activity contracted for the first time since the global financial crisis in February. Weakness was primarily seen in the service sector, where the first drop in activity for four years was reported, but manufacturing production also ground almost to a halt due to a near-stalling of orders.
Total new orders fell for the first time in over a decade. The deterioration in was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions. However, companies also reported increased caution in respect to spending due to worries about a wider economic slowdown and uncertainty ahead of the presidential election later this year.
9:43 a.m. ET: Gold trades at seven-year high
Gold prices jumped more than 1%, or $21.80, Friday morning amid a flight to safe haven assets. At more than $1,640 an ounce, the precious metal was trading at its highest level since March 2013. Gold was on track for its best week in eight months as of intraday trading Friday.
9:33 a.m. ET: Stocks drop, safe havens climb around market open
Stocks opened lower Friday morning, holding onto losses from the overnight session.
Declines in the Dow were led by Exxon Mobil and Goldman Sachs. In the S&P 500, the Energy sector lagged as crude oil prices dropped nearly 2%. Gold and Treasuries climbed, with the yield on the 10-year note down 3.5 basis points to below 1.5%.
Here were the main moves in markets, as of 9:33 ET:
S&P 500 (^GSPC): -0.42% or -14.01 points to 3,359.22
Dow (^DJI): -0.39% or -113.77 points to 29,106.21
Nasdaq (^IXIC): -0.42% or -40.57 points to 9,711.2
Crude oil (CL=F): -1.82% or -$0.98 to $52.90 a barrel
Gold (GC=F): +1.35% or +$21.80 to $1,642.30 per ounce
7:49 a.m. ET: Deere & Co. shares jump in pre-market trading after company beats 1Q expectations
Heavy equipment seller Deere & Co. (DE) posted better than expected results for its fiscal first quarter as farmer sentiment picked up after U.S.-China trade tensions deescalated.
The company posted adjusted earnings of $1.63 per share on sales of $6.53 billion, better than the $1.25 per share on $6.28 billion in sales anticipated, according to Bloomberg data.
Deere maintained its guidance for the full year, saying it expected net income in a range of between $2.7 billion to $3.1 billion. The midpoint of this range was higher than consensus analysts expected.
“Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports. At the same time, activity in the construction sector has slowed leading to lower sales and profit for our Construction & Forestry division,” CEO John May said in a statement.
“Also impacting results in Deere’s construction equipment business were our actions to reduce factory production and lower inventories in response to current market conditions,” he added. “Additionally, the quarter included costs of a voluntary employee-separation program, which is among the steps Deere is taking to improve flexibility and efficiency.”
Shares of Deere were up 7% in early trading. The stock had been down 4% for the year to date through Thursday’s close.
7:38 a.m. ET: Stock futures decline in early trading
U.S. stock futures edged lower in early trading, extending losses from Thursday. Each of the three major indices was set to decline for a second straight session.
Friday’s trading day comes on the heels of a volatile session Thursday, with the S&P 500, Dow and Nasdaq each off by more than 1% at the lows of the session. While no single catalyst was necessarily to blame, some analysts suggested a broad-based erosion of investor confidence was at play.
“[Thursday’s’ midday selloff had many root causes, but all signal poorer investor confidence than that reflected in U.S. stock prices,” Nicolas Colas, co-founder of DataTrek, wrote in a note. “3M-10Y Treasury spreads went to new 2020 levels of inversion and 30-Year yields [neared] record lows again.”
Meanwhile, the euro declined, and the Japanese yen and South Korean won fell in response to coronavirus fears, Colas added. “Bottom line: export more turbulence ahead,” he said.
In China, the Hubei province at the epicenter of the coronavirus outbreak revised its method of counting cases for the third time this month, further undermining confidence in the country’s official counts. The province’s health commission said on Friday that the total number of new confirmed cases for Thursday was 631, versus the 411 reported earlier, since prison tallies had not previously been accounted for in the region’s coronavirus reporting network. Globally, the coronavirus has killed more than 2,200 individuals among more than 76,000 cases.
Here were the main moves during the pre-market session, as of 7:38 a.m. ET:
S&P 500 futures (ES=F): 3,357.00, down 12.25 points or 0.36%
Dow futures (YM=F): 29,081, down 90 points or 0.31%
Nasdaq futures (NQ=F): 9,582.25, down 42 points or 0.44%
Crude oil (CL=F): $52.94 per barrel, down $0.94 or 1.74%
Gold (GC=F): $1,636.80 per ounce, up $16.30 or 1.01%