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US Stock Market Overview – Stocks Slide on Profit Taking Despite Strong Jobs Data

Stocks drop on coronavirus fears
David Becker

US stocks moved lower on Friday despite a stronger than expected US payroll report. US yields moved lower, and the dollar moved higher as concerns over the coronavirus perpetuated. Most sectors were lower,  led down materials, consumer staples bucked the trend. Chinese tourists are absent at the major shopping centers across the US and Europe which will likely put downward pressure on retail sales levels. Crude oil prices moved lower on Friday, remaining in  bear market territory. Russian Energy Minister said that Russia needed more time to determine if an output cut was necessary.

Retail Sales Could Slide

The Wall Street Journal reports that Chinese tourists are disappearing from major shopping capitals across the US and Europe. This comes as a result of the new coronavirus. The outbreak has exposed how dependent high-end retailers in places such as New York, and Paris have become visitors from China, who often spend more than the typical tourist.

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Payrolls Come in Stronger than Expected

The headline payroll number was stronger than expected, but yields dropped due to a rising unemployment rate, and revisions to 2019. The Labor Department reported that nonfarm payrolls increased by 225,000 in January, well above estimates. Expectations were for payrolls to rise by 160,000. The unemployment rate ticked higher to 3.6%, as the labor force participation rate increased by 0.2 percentage points to 63.4%. Expectations were for the unemployment rate to remain stable at 3.5%. The weather-sensitive construction industry added 44,000 positions, well above its 2019 average of 12,000. Manufacturing saw a loss of 12,000 jobs due to a drop in motor vehicles and parts.

Wage gains continued to be strong. The BLS reported that average hourly earnings rose 3.1% year over year compared to expectations of 3% growth. That marked 18 consecutive months of wage gains above 3%, as the initially reported 2.9% for December was revised up to 3%. The average workweek was unchanged at 34.3 hours.

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