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US Stock Market Overview – Stocks Drop as Consumer Sentiment Drops to 3-Year Low

House passes relief bill
David Becker

US stocks moved lower on Friday closing near the lows of the session. Futures ahead of the open were pointing to a 900-point decline in the Dow Industrials. The Dow was the worst performer declining by more than 4%. The House of Representatives passed the US assistance bill that was passed by the Senate on Thursday. The President is expected to sign the bill on Friday. The WHO announced they were going to being a trial of 4-different drugs for treatment for the novel coronavirus. US yields moved lower on Friday while the dollar tumbled another 0.8%. The dollar settled down more than 3.5% for the week but failed to lift commodities such as oil and gold. Sectors in the S&P 500 index were mixed, led down by energy shares. Oil prices fell, despite the largest drop in active rigs in history. Consumer sentiment dropped sharply declining to a 3-year low.

Energy Shares Decline

Oil prices headed south despite a larger than expected decline in active drilling rigs. Baker Hughes reported that the number of oil and gas rigs in the US fell again this week by 44, falling to 728, with the total oil and gas rigs clocking in at 278 fewer than this time last year. It is the largest single-week drop since February 2016.

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The Fed’s Balance Sheet Explodes

Federal Reserve’s efforts to keep markets running buoyed their asset portfolio to record levels. The Fed’s balance sheet ballooned to $5.3 trillion for the week. That’s well above the $4.52 trillion peaks it hit in mid-May 2016 before the Fed started rolling off the bonds it had acquired during and after the Great Recession.

Consumer Sentiment Tumbles

U.S. consumer sentiment fell to a three-year low according to data from the University of Michigan. The index of consumer sentiment dropped to 89.1 in March, its lowest level since October 2016,  from 101 in February. Expectations were for a fall to 90. March’s decline in sentiment was the fourth-largest in nearly 50 years.

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