US Stock Market Overview – Stocks Drop and Volatility Rises as Coronavirus Weighs on Riskier Assets

New home sales decline
David Becker

US stocks moved lower on Monday as fears of a slowing global economy due to the coronavirus, weighed on riskier assets. The VIX volatility index surged on Monday rising 30% at the highs of the day and closing up approximately 20%. Bond yields tumbled as investors sold stocks, as the dollar rose along with gold prices. US new homes sales dropped in December but finished the year up 10.3% in 2019. The Fed’s regional manufacturing survey in Texas showed that manufacturing is trying to rebound. Most sectors in the S&P 500 index were lower on Monday, led down by Energy shares. Consumer staples were the best performing sector in a down tape.

The VIX Surges But Closes Off the Highs

While US stocks dropped, the declines paled in comparison to European and Asian shares. The VIX volatility index surged higher rising near 30% on the session at the highs of the day. The surge in volatility comes ahead of Apple’s financial results that are scheduled to be released on Tuesday.

New Home Sales Decline

Home sales declined according to a report from the US Commerce Department. New home sales slipped 0.4% to an annual rate of 694,000 units last, with sales in the South dropping to more than a one-year low. It was the third straight monthly decline in sales. November’s sales pace was revised down to 697,000 units from the previously reported 719,000 units. Sales last month were concentrated in the $200,000-$749,000 price range. New homes priced below $200,000, the most sought after, accounted for only 10% of sales. Expectations were for new home sales to increase by 1.5% in December. Sales jumped 23.0% from a year ago. For all of 2019, new home sales increased 10.3% to 681,000 units, the highest since 2007.

Regional Manufacturing Edges Higher

Ther Dallas Federal Reserve reported that regional manufacturing rebounded in January according to a survey of business executives. The manufacturing production index, a measure of the state’s manufacturing conditions, rebounded to 10.5 in January. in November, the index had turned negative, indicating a contraction in the sector for the first time since 2016. In December, manufacturers recovered slightly, with the index climbing back into positive territory at 3.6.

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