US benchmark equity indexes retreated Thursday as trade tensions continued to grip markets ahead of official jobs data for February.
The Nasdaq Composite slid 2.6% to 18,069.3, while the S&P 500 declined 1.8% to 5,738.5. The Dow Jones Industrial Average dropped 1% to 42,579.1. Barring energy, all sectors closed lower, led by consumer discretionary.
The White House on Thursday issued temporary tariff exemptions for Canadian and Mexican goods that comply with a North American trade pact, Reuters reported.
The US administration recently doubled its levy on Chinese imports. Canada and China have announced retaliatory measures.
The US trade deficit surged 34% in January on the back of a jump in imports, government data showed Thursday. In other economic news, US job cuts in February hit their highest monthly total since July 2020, driven by government workforce reductions, Challenger Gray & Christmas said in a report.
The Bureau of Labor Statistics is expected to report Friday that the US economy added 160,000 nonfarm jobs last month, which would mark a rise from a 143,000 gain posted for January, according to a Bloomberg-compiled survey.
Weekly applications for unemployment insurance in the US dropped more than expected, while continuing claims advanced, government data showed Thursday. The data from recent weeks don't indicate any signs of "an inflection higher towards broader labor market weakness" regardless of seasonal volatility, Jefferies said.
US Treasury yields were mixed Thursday, with the 10-year rate rising 1.5 basis points to 4.282% and the two-year rate dropping 1.7 basis points to 3.969%.
In company news, MongoDB's shares plunged 27%. The database software maker late Wednesday issued a downbeat full-year financial outlook. Steaming giant Netflix sank 8.5% Thursday, among the steepest declines on the S&P 500. Burlington Stores' shares surged 8.7% after the off-price retailer posted higher-than-expected fiscal fourth-quarter results and indicated that the ongoing economic uncertainty could benefit discount stores. Kroger's fiscal fourth-quarter earnings came in ahead of market estimates, but revenue missed forecasts. The supermarket chain issued a full-year bottom-line outlook below Wall Street's expectations. The company's shares rose 2%.
West Texas Intermediate crude oil slipped 0.1% to $66.26 a barrel.
Gold fell 0.3% to $2,918.80 per troy ounce, while silver added 0.2% to $33.20 per ounce.
Portfolio News
Active Trading Portfolio: Following yesterday's analysis, it remains prudent to hold off on most FX trading for now, with the exception of the EUR/USD option strategy we discussed.
However, Crude Oil appears to have found some support and could present a day trading opportunity for those comfortable with tight stop-losses.
Factors influencing Crude Oil:
Bearish: Increasing US recession risks and a potential Ukraine/Russia ceasefire could weigh on prices.
Bullish: Increased European infrastructure and defense spending may boost demand.
We are monitoring Crude Oil closely and will notify you if and when we decide to enter a trade. Please note, that all trades will be 'day trades'. We do not intend holding positions in Crude Oil for a lengthy period. Check Out the Active Trading Portfolio.
Option Trading Portfolio: Following yesterday's proactive adjustment to our SPY bear put spread (see yesterday's market update for details), we're now exploring a new opportunity in the EUR/USD market.
Today, we're considering selling the 1.12 April Calls on the EUR/USD June futures contract. This potential trade will be discussed in detail during today's members meeting. You can also find a breakdown of the trade in the Options Portfolio collection. Check Out the Option Trading portfolio.
Buy and Hold Portfolio: Our long-term buy-and-hold portfolio has achieved a 6% year-to-date return, outperforming the broader market indexes (which are down 2.43%!). We are evaluating ten additional stocks for potential inclusion in the portfolio and added American Airlines and Carnival Corporation to the watchlist. Please refer to our Buy and Hold Portfolio for details. We will provide an update upon the completion of our stock selection. Check out out the Buy and Hold Portfolio.
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