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David Becker

US stocks tumbled on Friday with all three major indices dropping sharply. The decline in the Dow Industrial average was the second-largest drop in history. Concerns over the spread of the coronavirus and a decline in global growth weighed on riskier assets. The rapid spread of the virus through South Korea and Italy led to the market selloff. The selloff in the S&P 500 index put stocks in the red for 2020. All sectors in the S&P 500 index were lower on Monday, led down by Energy Shares and Cyclicals. Utilities that are defensive in nature were the best performing sector in the S&P 500 index.

The US 10-year treasury yield dropped below support levels falling to 1.46%, the lowest in more than 100-years. This put downward pressure on the mortgage market which could help boost home sales. Gold prices surged helping to buoy metals and gold miners. Crude oil prices tumbled more than 3% weighing on energy shares. Apple shares tumbled more than 4% helping to drag down the major indices. Bernie Sanders strong showing in the Democratic primary over the weekend put additional downward pressure on the healthcare sector. Bernie Sanders has made it clear that if he is elected President he will put healthcare companies out of business.

The VIX Surges but Settles Off its Highs

The VIX volatility index surged higher, closing up nearly 37% on Monday, but closed off the highs of the day. The VIX measures the “at the money strike price” implied volatility on the S&P 500 index. The VIX hit a high of 26% on Monday which was the highs level in more than 14-months but closed off its highs near 23%.


Buffet Sees a Slowdown

The oracle of Omaha was interviewed during the North American morning by CNBC. Warren Buffett said that while the U.S. economy still looks healthy, it isn’t as robust as it was 6-months ago thanks to headwinds like the Trump administration’s trade war and coronavirus. Buffet said that business is down but it’s down from a very good level.

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