Stocks closed lower for a third session in a row Wednesday on tepid U.S. data as the Federal Reserve’s Beige Book, an anecdotal account of business conditions, showed the partial government shutdown had weighed on economic activity.
How did stock indexes fare?
The Dow Jones Industrial Average DJIA, -0.52% fell 133.17 points, or 0.5%, to 25,673.46, while the S&P 500 index SPX, -0.65% dropped 18.20 points, or 0.7%, to 2,771.45. The Nasdaq Composite Index COMP, -0.93% declined 70.44 points, or 0.9%, to 7,505.92.
What drove the market?
The Beige Book’s tone was subdued with 10 of the central bank’s 12 districts seeing “slight-to-moderate” growth in late January and February. The partial government resulted in slower activity in about half of the districts, affecting a range of sectors, including retail, auto sales, real estate, restaurants, and manufacturing, according to the central bank.
Payroll-service company ADP estimated that the private sector added 183,000 jobs in February, below consensus estimates of 187,500 new jobs, according to FactSet. Markets typically pay closer attention to the official government jobs report, due Friday. Economists polled by MarketWatch expect that report to show job growth slowing from 304,000 in January to 178,00 in February.
The U.S. trade deficit soared to a 10-year high in 2018 of $621 billion, the Commerce Department said.
Investors took little solace from a new round of stimulus measures announced by Beijing Tuesday in an effort to shore up the world’s second-largest economy, which is seen suffering a cyclical slowdown exacerbated by the U.S.-China trade conflict.
Market participants are awaiting fresh catalysts to drive trade after largely factoring in upbeat prospects for U.S.-China trade talks to avert a further ramp up in tariffs.
Trump administration officials this week have offered upbeat assessments of the trade talks. A report by Bloomberg said President Donald Trump is pressuring U.S. negotiators to cut a deal with China soon in the hopes of fueling a market rally.
New York Fed President John Williams, in a speech to the Economic Club of New York, said the U.S. benchmark interest rate is “right at neutral,” suggesting that the Fed isn’t likely to raise interest rates soon. He also said the economy is “about as good as it gets: very low unemployment, sustainable growth and inflation just about at our 2% goal.”
What were analysts saying?
“Investors are recognizing that the market has risen dramatically since Christmas Eve, and they are using this opportunity to rebalance their portfolios,” Michael Reynolds, an investment strategy analyst at Glenmede, told MarketWatch.
Regarding the ADP jobs numbers coming in below estimates, E-Trade investment strategist Mike Loewengart wrote in an email that “while this news may be concerning to some, it’s important to take a step back and remember two things. First, this is just one of many data points for jobs—this weakness is really an outlier from other indicators.”
“Second, looking over a longer-term horizon the current job market is as strong as it’s been in years,” he added “[Investors] shouldn’t throw the baby out with the bathwater, especially with more jobs data on the horizon later this week.”
Which stocks were in focus?
Shares of Aon PLC AON, +4.29% rose 4.3% after the insurance and professional services company said it wasn’t pursuing a business combination with Willis Towers Watson Public Ltd. Willis Towers WLTW, -6.13% shares fell 6.1%.
Shares of General Electric Co. GE, -7.89% slumped 7.9% after Chief Executive Larry Culp told a broker-sponsored investor conference Tuesday that free cash flow in the industrial business would be negative in 2019.
Dollar Tree Inc. DLTR, +5.11% shares rose 5.1% after the discount retailer reported fourth-quarter, same-store sales growth above Wall Street consensus, though it predicted full-year 2019 earnings below analyst estimates, according to FactSet.
Shares of Abercrombie & Fitch Co. ANF, +20.37% rallied 20% after the apparel retailer beat fiscal fourth-quarter earnings and sales expectations and provided an upbeat outlook.
Shares of TripAdvisor Inc. TRIP, -3.19% fell 3.2% after an analyst at Cowen & Co. cut the stock to underperform from market perform.
How were other markets trading?
Asian stocks closed mostly higher with the Shanghai Composite Index SHCOMP, -0.14% ending the day up 1.6% and Hong Kong’s Hang Seng Index HSI, -0.33% closing 0.3% higher. Japan’s Nikkei 225 NIK, -0.74% meanwhile, lost 0.6%.
European stocks were weaker, with the Stoxx Europe 600 fractionally lower.
In commodities markets, crude oil futures CLJ9, +0.05% were pressured, while the price of gold GCJ9, +0.06% settled slightly higher and the U.S. dollar DXY, -0.05% was virtually unchanged.