Stocks tanked after we saw a massive jump in the trade deficit, and global bonds sold off on new concerns about Greece’s debt crisis.
First, the scoreboard:
Dow: 17,921.49, -148.91, (-0.82%)
S&P 500: 2,089.43, -25.06, (-1.19%)
Nasdaq: 4,938.58, -78.35, (-1.56%)
And now, the top stories on Tuesday:
The US trade deficit ballooned to $51.4 billion in March. This was an unprecedented jump on a couple of fronts: it was a six-year high, much more than the $41.7 billion forecast, and was the biggest deficit since October 2008. It was a 43.1% increase from last month, the largest jump in 18 years. The surge in the deficit — the gap between imports and exports — has been largely blamed on the nine-month slowdown at West Coast ports, and on the strong US dollar.
This means the economy likely contracted in the first quarter. Many economists downgraded their estimates for Q1 Gross Domestic Product into negative territory. “Guess you can kiss the positive 0.2% rise in first quarter real GDP good-bye,” wrote Chris Rupkey at Bank of Tokyo-Mitsubishi. TD Securities estimates that the jump in the deficit could erase between 0.2 and 0.3 percentage points from first-quarter GDP. Pantheon Macroeconomics’ Ian Shepherdson had this take: “Barring a miracle in other data, the March trade numbers mean Q1 GDP growth will be revised to less than zero. Recession!* *Not really.” So there’s some relief.
West Texas Intermediate crude oil crossed the $60 per barrel mark for the first time since December. Reuters reported that protests in the eastern Libyan oil port of Zueitina stopped crude flows, and blocked exports. Also, Saudi Arabia raised its official selling price for crude oil to the US and Northwest Europe, Reuters reported. Still, Saudi Arabia’s oil minister told CNBC in a morning interview, “No one can set the price of oil — it’s up to Allah.”
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