Stocks Fall Into The Red
U.S. stocks are in the red today, capping a week in which the S&P 500 index has given up 1.8% on widespread risk aversion largely related to geopolitical concerns.
The S&P 500 is currently trading at 1845, slightly below Thursday's closing levels. Treasuries are trading slightly higher, with the yield on the 10-year note one basis point lower at 2.64%, and the 5-year/30-year curve is flattening.
The U.S. dollar is down 0.5% against the Japanese yen and 0.4% lower against the euro.
"Thursday was a pretty classic distribution day (up volume, down price, down breadth vs. prior day)," says Jonathan Krinsky, chief market technician at MKM Partners, of yesterday's stock market action.
"Many were looking for reasons as to why the market sold off, but we need only to look at how extended many areas of the market had become (small-caps and biotech in particular) to realize this is just part of a reversion to the mean."
The Russia-Ukraine conflict continues to dominate the headlines.
The focus is on Ukraine's Crimea region, an area home to many ethnic Russians, which will hold a referendum over the weekend on declaring independence from Ukraine. The market angst over the recent conflict between Russia and Ukraine in recent days has stemmed largely from military developments in Crimea.
"Yesterday's Ukraine threat roller-coaster may not reverse today ahead of the Crimean election over the weekend," says David Keeble, head of fixed income strategy at Crédit Agricole.
"Clearly, the West is upping the rhetoric and Russia is not backing down. This makes the weekend vote rather a center point for the fear trade. The main unknowns are not the referendum result or that sanction threats will be displayed, but rather if violence erupts in Crimea, and whether the Russians instantly annex Crimea or play out a waiting game to achieve the same result in the future along with some legal niceties. It all suggests playing it cautious, which is what some clients were doing on Thursday - buying back their shorts [in the Treasury market]."
European indices have been in the red all morning, but have rallied somewhat from the lows, and the German DAX - one of the worst performers in recent sessions - is 0.2% higher today. Euro zone government debt is catching a bid as well, sending yields lower - both in the "core" countries like Germany and France and in the periphery that encompasses Italy, Spain, and Portugal.
This morning saw two notable economic data releases in the United States - February producer prices data and preliminary March consumer confidence data. Both missed consensus estimates, but markets were unfazed.