Rough Day On Wall Street; NASDAQ In Correction; February Payrolls Stunning

(Editor's Note: This post was originally supposed to be posted at roughly 8:35 am ET, Friday, March 5. We tried. It was at that time that internet service was cut off, so, this post never actually made it to the internet. What happened is that some of our town's public service workers (always remember, when you seek incompetence, look straight to government) actually cut our service provider's main fiber connection to the internet (We have an email that proves it). Thus, not only Money Daily and Downtown Magazine were offline for most of Friday (finally got it back about 4:40 in the afternoon), so were many people and businesses in Monroe County, TN. We didn't notice that the post reverted back to draft form on Blogger until about 3:00 pm ET on Saturday. The same post on Downtown Magazine (dtmagazine.com), did, fortunately, get uploaded to the internet before service was abruptly interrupted. Sorry for any inconvenience this may have caused. -FR. Stocks took a serious nosedive on Thursday when Fed Chairman, Jerome Powell, failed to address recent volatility and other issues at a noon speech to the Wall Street Jobs Summit, carried live over the internet.

While there was little indication that Powell was supposed to reassure markets at this juncture, from the tone of his remarks it appeared that the Fed Chairman was somewhat tone deaf to recent declines in stocks and a bond market rout that was producing runawway interest yield on the 10-year note.

As close as the Chairman got to offering reassurances was the following:

“I would be concerned by disorderly conditions in markets or persistent tightening in financial conditions that threatens the achievement of our goals.”
--Jerome Powell

If the Fed's goals are to heat up the pace of inflation (which has more or less been made official policy) and keep the stock market from imploding, he's not exactly batting 1.000. The various bond, stock and commodity market would be better served to not rely upon officials such as Powell or Treasury Secretary Janet Yellen for guidance as they've proven to be largely incompetent in both monetary and fiscal policy.

The key takeaways from Thursday's carnage were:

The NASDAQ dipped into correction territory on an intraday basis when it marked below 12,757.61. On a closing basis, it would have to close at 12,685.50.

The Dow Jones Industrial Average fell more than 720 points early afternoon before retracing the losses by half.

The S&P 500 was down nearly 100 points, eventually closing down 51.

Yield on the 10-year note crested above 1.55%

Bitcoin fell roughly six percent and continues at lower levels

Silver dropped to its lowest level since late January

Gold continued its months-long decline, closing in NY below $1700 an ounce, down more than $300 from August highs

Unrelated, WTI crude oil shot up dramatically as the OPEC+Russia nations agreed to not boost production, putting pressure on prices worldwide. WTI closed above $64 on Thursday and continues higher ($65.39/barrel) in Friday's futures trading.

What comes next for markets is a double-edge sword with March non-farm payroll data due out at 8:30 am ET and the US Senate embarking upon weekend debate of the $1.9 trillion COVID stimulus bill which faces an uncertain fate.

Money Daily will stay with the narrative through the release of the payroll data in this posting, and will update on the Senate in Sunday's WEEKEND WRAP.

Boring deeper into Thursday's stock rout, the only saving grace for Wall Street was the sudden appearance of bids - likely the work of the PPT - right at the day's lows at 2:00 pm ET. The NASDAQ priced at 12,555, which would have been an 11% decline from the recent closing high had the number persisted to the session's end.

There may have been some dip-buying, but it was likely pretty thin and without spirit. With risk rising and the NASDAQ now having posted lower closes on nine of the past 13 sessions, it's doubtful that investors would be pouring money into anything that didn't offer the potential for outsized gains or at worst, price stability. Currently, there's little of either available.

After closing at an all-time high of 31,961.86 on February 24, the Dow Industrials have closed lower five of the past six sessions and are down a mere 3.25% as of Thursday's close. Similarly, the S&P 500 made a record close of 3,925.43 on the same day as the Dow and is only down four percent over the past six trading days.

What's dragged down the NASDAQ are high-flying tech stocks, which hasn't had much affect on the other indices. A four to six percent decline is surely nothing to worry veteran traders, particularly those with longer views of the market.

Getting past Friday's non-farm payroll numbers and through the passage of some kind of relief bill from congress will not be easy. With the Senate comprised of 50 senators from each side of the aisle, passing the stimulus bill intact in the form sent over by the House is unlikely, though Democrats appear intent on ramming the legislation though on a partisan basis with Vice President Kamala Harris casting the deciding vote and Biden sure to sign it.

Early next week may be somewhat rocky for markets, but while it's been only whispered, yield curve control (YCC) may be implemented by the Fed in short order, designed to keep longer-dated interest rates in line with the ultra-low short end of the treasury curve.

The 10-year and 30-year bonds have been noisy of late because of the threat of inflation. Food prices have risen for the past nine months with no signs that they're abating soon. The outwardly absurd price of crude oil is also fueling inflation by raising prices at the gas pump, a condition that can only slow any nascent recovery as the COVID crisis winds down and more states and municipalities begin the reopening process.

In less than two weeks, the FOMC assembles for a scheduled policy meeting on March 16 and 17. It is likely that, at the conclusion of that meeting, a statement designed to cool market conditions will be announced, returning markets to the preferred path of relentless gains. After all, there's an enormous amount of money being sloshed around by the Fed and Treasury, and when the public begins receiving $1400 checks, stocks are likely to be one of the main beneficiaries. The timing of a slight decline in the markets couldn't be better, ripe for retail speculation.

March's non-farm payroll was expected to show 200,000 new jobs versus a gain of 49,000 in January and the unemployment rate unchanged at 6.3%. When the BLS released the data at 8:30 am ET, everybody was stunned as payrolls increased by 379,000 in February and the unemployment rate fell to 6.2%.

Stock futures, already ramped higher in earlier activity, continued to climb, pointing to a positive open on Wall Street.

Enjoy the warmer weather. Check back on Sunday for updates in the WEEKEND WRAP.

At the Close, Thursday, March 4, 2021:
Dow: 30,924.14, -345.95 (-1.11%)
NASDAQ: 12,723.47, -274.28 (-2.11%)
S&P 500: 3,768.47, -51.25 (-1.34%)
NYSE: 14,959.41, -239.78 (-1.58%)