Moneybeat - Another white-knuckle ride on Wall Street

MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Here’s a 10-word summary of the week on Wall Street: Two steps forward, one step back, two forward, two back. 

In several more words: The major stock indexes ended the week just a little bit better than they began. But at least it wasn’t worse. And after the previous week of jaw-dropping and record-setting declines, that can only be counted enormously positive.

The two good days were Monday, we’ll call that snapback day, and Wednesday, the day after a more business-friendly Democrat prospered on Super Tuesday, Joe Biden.

Thursday and Friday were downers, and technically we remain in a market correction. That’s defined as the major indexes falling 10 percent from their most recent high point. The Dow Jones Industrial Average, the Nasdaq, and the Standard & Poor’s 500 all still 12 to 12-1/2 percent below the February high.

Here’s just one more troubling economic marker and a sign of the coronavirus times: With investors selling off uncertain stocks in favor of more stable Treasury notes, the yield on a 10-year Treasury hit a record low level: at one point on Friday, they were yielding a return of just two-thirds of one percent. What that means is the yield has fallen 50 percent in just two weeks.

REICHARD: Industry sectors that cater to almost any activity where people have to gather have lost billions in value: movie theaters, business conference organizers, hotels, airlines, and amusement parks. The big German airline Lufthansa says it will cut up to half of its flights in the next few weeks. Norwegian Cruise Lines and Royal Caribbean have both lost more than 50 percent of their stock value since the start of the year. The cruise line that owns the ship currently stuck off the coast of California, Carnival Cruise Lines, has seen its stock drop 47 percent.

Shares of movie theater chains like AMC, Cinemark, and IMAX have slumped by about a third in the last three months. Executives pushed the release date of the newest James Bond film from April back to November, hoping that by then the outbreak’s under control.

EICHER: OK, everything we’ve reported so far is about legitimate market concerns. But at the end of the day, it’s as we said last week, pure panic selling. We’ll end with some hard data, pretty positive about the underlying economy.

The job market remains strong. Employers in February added more than 270,000 jobs and that dropped the headline unemployment rate back to 3.5 percent from 3.6 in January. Wage growth continues about 3 percent year-on-year. 

And the government also upgraded its estimate of job growth in December and January, and so now we can say that over the past three months, employers have added an average 240,000-plus new jobs. That’s the best quarterly pace in three-and-a-half years.

REICHARD: Even though that’s a glance in the rearview mirror, there is a more timely gauge of labor-market health, and that’s the government’s weekly report on applications for unemployment benefits. That number, too, is reassuring. The most recent data shows a drop in workers filing for unemployment, and the current level is about the same as the average over the past month, still historically very low, and a good sign.

EICHER: Remember I mentioned the low yield on 10-year Treasury notes: those levels tend to rise and fall in tandem with long-term home loans, and that’s good news on the housing front, because as Treasury yields fall, so do mortgage interest rates. The average rate on a 30-year fixed dropped below 3.3 percent. 

Mortgage buyer Freddie Mac has been keeping track and publishing these rates since 1971, and the current 3.29 percent is the lowest rate recorded. So no surprise, home loan applications last week were more than 10 percent higher year-on-year, and refinance applications doubled.

And that’s this week’s Monday Moneybeat.

(AP Photo/Richard Drew) Trader Gregory Rowe works on the floor of the New York Stock Exchange, Friday, March 6, 2020. 

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