Market News & Analysis
Asia Morning: US Stocks Drop on Powell's Warning
Ming Lam May 14, 2020 11:05 AM
Powell warned of an extended period of weak growth and stagnant incomes due to the coronavirus pandemic. And he said additional fiscal stimulus should be provided to prevent long-lasting economic damage.
Meanwhile, the Fed chief stated that the central bank would not push interest rates below zero.
The Dow Jones Industrial Average sank 516 points (-2.2%) to 23,248, the S&P 500 lost 50 points (-1.8%) to 2,820, and the Nasdaq 100 was down 112 points (-1.2%) to 9,000.
Source: GAIN Capital, TradingView
Automobiles & Components (-5.27%), Banks (-4.41%) and Energy (-4.39%) sectors lost the most.
Coty (COTY -15.5%), National Oilwell Varco (NOV -10.7%), Under Armour (UAA -9.7%), Norwegian Cruise Line (NCLH -7.0%) and Salesforce.com (CRM -4.5%) were the top losers.
On the other hand, BlackRock (BLK +6.9%), Regeneron Pharmaceuticals (REGN +3.5%), Newmont Goldcorp (NEM +2.3%) and Equinix Inc (EQIX +2.3%) posted gains.
On the technical side, about 25.8% (29.9% in the prior session) of stocks in the S&P 500 Index were trading above their 200-day moving average, and 44.4% (64.9% in the prior session) were above their 20-day moving average.
The VIX Index - Wall Street’s fear gauge - rose 2.21 points (+6.7%) to 35.25, the highest level since May 4.
U.S. official data showed that the Producer Prices Index dropped 1.3% on month in April (-0.5% expected).
Later today, Initial Jobless Claims for the week ended May 9 (2.500 million expected) and Import Price Index for April (-3.2% on month expected) will be reported.
European stocks returned to negative territory, with the Stoxx Europe 600 Index losing 1.9%. Germany's DAX sank 2.6%, France's CAC slumped 2.9%, and the U.K.'s FTSE 100 was down 1.5%.
U.S. Treasury prices remained firm, as the benchmark 10-year Treasury yield declined 4.2 basis points to 0.648%.
Spot gold price jumped 13 dollars or 0.8% to $1,715 an ounce.
Oil prices came under pressure as Powell pointed out that the economic outlook was highly uncertain. U.S. WTI crude oil futures (June) slid 1.9% to $25.29 a barrel.
On the forex front, the ICE U.S. Dollar Index gained 0.2% on day to 100.20. Federal Reserve Chairman Jerome Powell said they are not considering negative interest rates, despite a highly uncertain outlook and significant downside risks.
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