Market Perspective for March 2, 2020

Equities rebounded on Monday, with the Dow Jones Industrial Average increasing 5.10 percent. It has now advanced 8.20 percent off its low on Friday. The S&P 500 rallied 4.60 percent and the Nasdaq gained 4.49 percent.

Several factors boosted stocks on Monday. Last week’s move was one of the most extreme in history, setting up a technical snap-back. Chinese factories are getting back to work faster than expected. There is also widespread anticipation of a globally coordinated intervention by central banks.

SPDR Utilities (XLU) rebounded 5.87 percent and SPDR Technology (XLK) climbed 5.79 percent. iShares Edge MSCI Minimum Volatility USA (USMV) jumped 5.53 percent as buyers sought stability. iShares Nasdaq Biotechnology (IBB) gained 4.71 percent. Biotech held up well during the market decline and IBB only needs a 4 percent rally to set a new all-time high.

The U.S. manufacturing sector expanded in February according to the PMI surveys. Germany’s PMI jumped from 45.3 in January to 48.0, indicating the heart of Europe’s manufacturing sector could be back on track. It’s likely the coronavirus will disrupt this in March, but manufacturing will return to its longer-term trend sooner rather than later.

Motor vehicle sales for February will be released tomorrow. Analysts expect they will match January’s annualized pace of 16.8 million vehicles.

The February employment report will be released. Economists project 170,000 new jobs, an unemployment rate of 3.5 percent and wage growth of 0.3 percent.

Crude oil bounced nearly 6 percent on Monday, lifting SPDR Energy (XLE) 4.15 percent. Natural gas bounced too, but potentially warmer weather in March kept a lid on First Trust ISE Revere Natural Gas (FCG). It advanced only 0.66 percent.

iShares MSCI Emerging Markets (EEM) gained 2.17 percent on Monday.

This week’s reporting companies includes Autozone (AZO), Kohl’s (KSS), Ross Stores (ROST), Urban Outfitters (URBN), Nordstrom (JWN), Brown-Forman (BFB), Campbell Soup (CPB), Splunk (SPLK), BJ’s Wholesale Club (BJ), Kroger (KR), Costco (COST) and Ambarella (AMBA).

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