Stock market closes lower as investors pump brakes ahead of earnings
Published: Apr Three, two thousand seventeen Four:24 p.m. ET
Nasdaq shortly touches intraday record, then slips
WallaceWitkowski
RyanVlastelica
U.S. stocks closed lower Monday, but off session lows, to kick off the 2nd quarter as disappointing vehicle sales and lackluster economic data amplified concerns that lofty equity valuations won’t be buttressed by commensurately strong corporate quarterly results in coming weeks.
The Dow Jones Industrial Average DJIA, -1.07% which had fallen more than one hundred points earlier, finished down 13.01 points, or less than 0.1%, at 20,650.21, weighed down by shares of DuPont US:DD American Express Co. AXP, -0.96% and Cisco Systems Inc. CSCO, -2.11%
The S&P five hundred index SPX, -0.76% fell Five.01 points, or 0.2%, to close at Two,357.71, with seven out of eleven sectors completing in the crimson, led lower by the consumer-discretionary, materials and technology stocks.
Both the Dow and the S&P five hundred had been in danger of ending below their 50-day moving averages for the very first time since the November election, a sign that upbeat sentiment, underpinned by bullish hopes that President Donald Trump’s market-friendly policy proposals would be written into law soon, is fading.
The Nasdaq Composite Index COMP, -0.93% which had shortly hit an intraday high at Five,928.93 early in the session, dropped 17.06 points, or 0.3%, to close at Five,894.68.
The very first quarter, which ended last week, finished with solid gains, with major indexes scoring advances of Four.6% to 9.8%. That rally has taken Wall Street to repeated records, but the scale of the stir has some analysts worried about equity valuations.
Mixed auto sales weighed on sentiment, said Peter Boockvar, chief market analyst at The Lindsey Group. The auto industry is seen as a major driver for the economy, and when coupled with concerns about when Trump’s tax policy will materialize, that is going to put pressure on the broader market, he said.
“Weak car sales are raising the question of economic growth and that’s flattening the yield curve and affecting financials,” said Boockvar. Financial stocks, which had earlier in the session been one of the worst performing sectors on the S&P 500, finished the day down 0.3%.
The yield on the 10-year Treasury note TMUBMUSD10Y, +0.55% fell five basis points to Two.335% on Monday. Over the very first quarter, the yield curve became flatter, meaning the difference of rates inbetween short-term bonds and long-term bonds narrowed, signaling concern over the economic outlook.
Economic data, which demonstrated some signs of softness Monday, added to the market’s cautious tone. The U.S. Markit manufacturing purchasing manager’s index fell to 53.Three in March from 54.Two the previous month, while a reading of manufacturing from the Institute for Supply Management for March fell to 57.Two from 57.7, however the employment index hit a six-year high. A reading of fifty indicates economic expansion.
“I expect we’ll see some softness until earnings begin to come in,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services. “Right now we’re positioning for earnings to be strong, particularly in the tech, financial and health-care sectors, but there is a broad concern about valuation.”
“We’re leaving a time when you can just buy the broad market,” Kaufman said. “I think indexers will be OK going forward, but there will be greater opportunities for stock pickers or people who go after specific areas of the market.”
Data and Fed speakers: Despite Monday’s data, Friday’s jobs numbers will likely be the fattest concentrate before companies begin reporting earnings in the middle of the month. Some are worried that the strong embark to U.S. employment growth in the very first two months of two thousand seventeen will be difficult to maintain.
Among Federal Reserve speakers, Philadelphia Fed President Patrick Harker reiterated on Monday that he still backs two more rate hikes this year. Richmond Fed President Jeffrey Lacker is scheduled to speak on the Wall Street concept of “too big to fail” at Washington & Lee University in Lexington, Va., at five p.m. Eastern.
Stocks to witness: Shares of Tesla Inc. TSLA, -1.63% closed up 7.3% after the electric-car maker hammer expectations with 25,000 deliveries in the very first quarter.
Auto-related stocks took a pounding, with shares of O’Reilly Automotive Inc. ORLY, +1.72% BorgWarner Inc. BWA, -1.50% and CarMax Inc. KMX, +1.32% all completing down more than 3%.
Panera Bread Co. US:PNRA shares leaped to a record on reports of a possible sale. Shares closed up 7.9%.
DryShips Inc. DRYS, -11.95% finished down almost 19% after the operator of cargo ships announced a private suggesting of up to $226.Four million worth of its shares, and a deal to buy six vessels.
Other markets: Asian markets ADOW, -0.53% finished modestly higher Monday, while the Europe Stoxx six hundred index SXXP, -0.32% SXXP, -0.32% declined 0.5%. The FTSE one hundred index UKX, -0.51% also kicked off the 2nd quarter on a subdued note.
The ICE Dollar Index DXY, -0.12% which measures the value of the U.S. dollar relative to a basket of foreign currencies, traded up 0.2% to 100.54. Oil prices US:CLM7 declined 0.7% to lodge at $50.24 a barrel and gold prices US:GCM7 lodged up 0.2% at $1,254 an ounce.
—Barbara Kollmeyer in Madrid contributed to this article.