Dow Makes It Five Straight Days in the Red as U.S., Chinese Data Roil Investor Confidence

U.S. stocks extended their losses Thursday, with the Dow recording its fifth consecutive drop after mixed employment data and plunging Chinese exports added to concerns about stagnation in the world’s two largest economies.

Dow Falters Again

Wall Street’s major indexes pared almost all of their losses in the final hour of trading but still finished in negative territory. The Dow Jones Industrial Average closed down 22.99 points, or 0.1%, at 25,450.24. The blue-chip index was down by as much as 221 points.

The broad S&P 500 Index of large cap stocks declined 0.2% to close at 2,743.07. Losses were concentrated in just five of 11 primary sectors, with energy stocks tumbling 1.9%. The sector was hit hard by declining oil prices following the release of dismal Chinese data.

The technology-focused Nasdaq Composite Index fell 0.2% to 7,408.14.

A measure of expected volatility over the next 30 days reached its highest level in over five weeks on Friday, a strong signal that the two-month rally in stocks was coming to an end. The CBOE Volatility Index, commonly known as the VIX, peaked at 18.33. It would eventually give up those gains to settle below 17.00.

Job Creation Slows to a Crawl

The U.S. labor market showed signs of slowing last month, as job creation plunged to its lowest level in over a year.

Employers added a mere 20,000 workers to payrolls in February, far fewer than the 180,000 analysts had expected, the Labor Department said in its monthly nonfarm payrolls report. It was the slowest pace of hiring since September 2017 when the U.S. labor market was reeling from the blowback of two massive hurricanes.

The monthly report wasn’t entirely negative as unemployment fell to 3.8% from 4%. Falling unemployment was more noteworthy because workforce participation – the percentage of Americans employed or actively searching for work – went unchanged.

Average hourly earnings, a closely-watched proxy for inflation, climbed 0.3% in February and 3.4% annually, official data showed. Both figures were higher than expected.

Chinese Exports Plunge

China’s export sector suffered a massive drop in February, highlighting the impact of the U.S.-led trade war on mainland producers.

Exports plunged 20.7% in February from a year earlier after climbing 9.1% in January, the General Administration of Customs reported Friday. Analysts had expected a gain of 5.3%.

China’s exports to the U.S. dropped 26.2% during the month, while imports from the country fell 28.6%. That gave Beijing a surplus of $14.72 billion with the United States, the smallest in two years.

Although China’s export sector had been in retreat long before President Trump’s trade war, the standoff has magnified downside risks to an economy that still relies on smokestack industries to sustain its growth. Foreign direct investment (FDI) to China has also been affected by the trade impasse, which may have forced Beijing to make more concessions in its current negotiations with the United States.

The Wall Street Journal reported last weekend that a new trade deal with China was imminent. Until now, no new details have emerged.

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Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi