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Stock Market Volatility Continues, Plus Feb CPI

The stock market wild see-saw ride continues this morning, with pre-market futures giving back most of the 1100+ points the Dow made yesterday. This, of course, followed the 2000-point drop on Monday — the single-largest point drop in U.S. stock market history. Currently, the Dow look to open down 950 points, the Nasdaq -290 and the S&P 500 off by 110 points from Tuesday’s close.

It must be a dream come true for traders who play the margins of the volatility index (VIX), with wide 3-8% swings every single day. With bond yields now sinking to beneath 1% — another all-time record — there isn’t a lot for the rest of us investors to do but hold on and ride out the storm. Even crude oil prices, following last weekend’s price war between Russia and Saudi Arabia, have taken a tumble to the low-mid $30S.

As far as the coronavirus pandemic, while conditions appear to be improving in China due to weeks-long sequestration of those infected, the number of affected people around the globe continues to climb. Worldwide, 121K confirmed cases of COVID-19 have so far been reported, with more than 4300 deaths and 5600 more conditions considered serious. In the U.S. alone, we see 1000+ Americans having tested positive for the coronavirus, with 31 deaths as of this morning.

In normal times, we would have led off the Ahead of Wall Street article with new data reported for February’s Consumer Price Index (CPI). The headline read of +0.1% was a tenth better than expected, and matched the previous month’s slow growth in consumer pricing. Core CPI (stripping out volatile food & energy costs) rose 0.2% last month, as expected.

Year over year, headline CPI reached 2.3%, while core was 10 basis points higher, for the 24th straight month with core CPI up 2% or higher. Of course, with the global pandemic cancelling travel, leisure, business and retail plans everywhere, we do not expect numbers like domestic CPI to stay in-line with what we’ve seen for the past two dozen months.

Testing, both in the U.S. and abroad, remains the key factor. Only when market participants truly have a good idea how far-reaching — and how deadly — COVID-19 ultimately is will we begin to see light at the end of the tunnel. For now, proactive measures such as rigorous hand-washing and the self-quarantining of people possibly at risk of carrying the disease is still the precarious way forward.

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