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Stocks Tumble on Geopolitical Tension

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Stocks Tumble on Geopolitical Tension

Stocks opened the trading session higher but mid-day turned south tensions in Ukraine increased as Russian troops massed at the Ukraine border. One positive factor that could assist US stocks is that the percent of new highs versus new lows is now at 3.6% which is very close the lows seen at the end of January before the S&P 500 index took off to new all-time highs. Japanese data released on Thursday was much stronger than expected, but it failed to lift the Nikkei, which has experienced significant volatility so far in 2014. All three major indices closed in the red, with the Dow and Nasdaq down 1.4%.

China has released more data indicating that its economy is slowing, with industrial production growth easing to 8.6% on year in January and February from 9.7% previously and missing consensus of 9.5%. Retail sales weakened to +11.8% from +13.6%, while urban fixed-asset investment also weakened.

Japanese data on the other hand was better than expected but not strong enough to boost the Nikkei on Thursday. Japan reported a much larger than expected jump in machine orders, a proxy for capital investment. The 13.4% increase in the month of January was nearly twice the consensus forecast and bodes well for Q1 growth.

Retail sales came in stronger than expected at 0.3% month over month compared to the 0.2% climb expected by economists. Excluding autos, retail sales printed at 0.3% which was also slightly better than expected. Excluding autos and gasoline sales climbed 0.3%, in February. Revisions to the prior month showed a decline from 0.4% to a decline of 0.6%. When combining the two months together, the net is basically a flat month over month change for the first two months of 2014.

Jobless claims performed better than expected for the week ending March 8, 2014. Jobless claims dropped 9K from 324K to 315K which was better than expected 323K expected by economists. Important prices climbed 0.9% which was in line with expectations. The better than expected claims data pushed US interest rates slightly higher, but did not change the trajectory of the Euro.

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