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S&P 500 extend weeklong slide after disappointing jobs numbers, China trade data

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March 8th, 2019

S&P 500 futures fell at the start of trade Friday, pointing to a fifth straight session of losses for Wall Street, after a disappointing jobs report and a slump in Chinese exports piled onto concerns about slowing global growth.
How did major indexes fare?

The Dow Jones Industrial Average DJIA, -0.72% fell 173 points, or 0.7%, to 25,291, while the S&P 500 index SPX, -0.87% was down 22 points, or 0.8%, to 2,727. The Nasdaq Composite Index COMP, -1.00% dropped 72 points, or 1%, to 7,350.

The Nasdaq is facing a 3.3% drop for the week, while the Dow industrials and S&P 500 are off around 2.8% each.
What’s driving the market?

Investors were caught off guard by a surprisingly weak jobs number, after the Labor Department announced the U.S. economy added just 20,000 new jobs in February, well below the 178,000 economists polled by MarketWatch had forecast.

The unemployment rate fell form 4% to 3.8%, while workers saw a an 11 cents-per-hour increase in average hourly earnings, the largest increase since the end of the 2009 recession.

The report comes on the heels of dismaying economic data from China—the world’s second-largest economy reported a 20% drop in February exports on the heels of a 9.1% gain in January. Officials attributed the plunge to sagging demand and some distortions from the Lunar New Year holiday. But economists said that even if those two months are added together, the data looked weak.

And China’s biggest brokerage, Citic Securities, hit People’s Insurance Group of China 601319, -9.98%  with a rare sell rating, citing concerns over valuations, according to Reuters. Those shares slid 4% in Hong Kong, after falling as much as 10% at one point.

China’s news adds to concerns about global growth. Investors are still reeling from a more dovish-than-expected European Central Bank, which announced new measures to support a slowing economy on Thursday. That included fresh long-term loans to European financial institutions and a surprise pledge to hold off on any interest-rate increases until at least the end of the year.

Other data on Friday showed German manufacturing orders fell sharply in January, though December data was revised upward.

Meanwhile, uncertainty was lingering over a U.S.-China trade deal. Washington and Beijing have yet to set a date for a summit to resolve their trade dispute, the U.S. ambassador to China, Terry Branstad, said in an interview with The Wall Street Journal. Branstad said negotiators need to further narrow the gap in their positions, including over enforcement of a potential deal, before any summit arrangements are made.

Read: U.S. ambassador to China says no date yet for summit, trade deal not ‘imminent’
What are the analysts saying?

“Job growth is slowing, no doubt about that,” JJ Kinahan, chief market strategist at TD Ameritrade told MarketWatch. He cautioned not to read too much into one report, however, given the recent volatility in the numbers, which may be related to the government shutdown and recent extreme weather in the Midwest.

“Job weakness was concentrated in construction and hospitality sectors, which are very dependent on the weather,” he said. “That has contributed to this number being screwy. “

Kinahan also argued that while stock-index futures fell on the jobs news, there was a greater decline following news of weak Chinese exports and comments from the U.S. ambassador to China suggesting a trade deal is not imminent. “This reaffirms that the central story for markets is tariffs and slowing global growth.”

“This [jobs report] will be a bit hard to digest—it’s really mixed,” wrote Mike Loewengart, investment strategist at E-Trade Financial Corp wrote in a Friday note. “Great to see wages up as that was a sticking point last year. And while the job growth for February leaves much to be desired, its encouraging to see both December and January revised upward.’ he added.

“Bottom line is fragile employment data potentially signals stagnating growth, which could start to bleed further into other fundamentals like retail sales,” he continued. “Combine this with next week’s CPI data and if that too disappoints it will be a key signal that a slowing economy is a real trend and beginning to consistently show in the data.”
Which stocks are in focus?

DowDuPont Inc. shares may be in focus Friday, after the board of the materials and chemicals giant approved the separation of its materials science division, setting up the creation of a new publicly traded firm called Dow. The new firm is set to trade independently on or about March 20. Shares traded 0.9% lower Friday.

Shares of Costco Wholesale Corp. rose 3.7% Friday, after the bulk retailer reported fiscal second-quarter earnings Thursday evening that surpassed expectations.

Big Lots Inc. BIG, +8.83% stock rose 9.6% Friday morning, after the retailer reported fiscal fourth-quarter sales and profits that beat Wall Street estimates.

Shares of Okta Inc. OKTA, -10.26% were under pressure , after the identity-management company issued disappointing earnings guidance Thursday evening. The stock is down 9.5% Friday.

Shares of National Beverage Corp. FIZZ, -21.49% fell 24.5%, after the maker of La Croix seltzer water issued fiscal third-quarter financial results Thursday that fell well short of expectations.
What data and Fed speakers are ahead?

New-home construction rebounded in January, after a weak showing in December, the Commerce Department reported Friday. Housing starts ran at a seasonally adjusted annual rate of 1.23 million in January, an 18.4% increase from December’s revised reading, but 7.8% below last the year ago level.

Building permits rose 1.4% in January, from the month before, to a seasonally-adjusted annual rate of 1.33 million. That’s 1.5% below the year-ago level.

At 10:15 p.m., Federal Reserve Chairman Jerome Powell will give a speech on monetary policy normalization and review at Stanford University.
How did the major benchmarks fare yesterday?

On Thursday, the Dow Jones Industrial Average fell 200.23 points, or 0.8%, to 25,473.23. The S&P 500 index dropped 0.8% to 2,748.93 and the Nasdaq Composite Index shed 1.1%, to 7,421.46.
How did other markets trade?

Asian stocks closed lower across the board, led by that big loss for the Shanghai Composite SHCOMP, -4.40%  and a 2% drop for the Nikkei 225 NIK, -2.01% Investors sought shelter in perceived safe haven assets such as the Japanese yen USDJPY, -0.49% which weighed on the U.S. dollar DXY, -0.22% Gold prices GCJ9, +0.81%  also benefited.

Oil CLJ9, -3.25% prices fell sharply. Gold prices were rising 1.1%, while the U.S. dollar was falling 0.3% against its peers.

European stocks tracked global equities lower, with the Stoxx Europe 600 index SXXP, -0.82% falling 0.5%.

See Also: S&P 500 News Blog Dow Jones Industrial Average

 

Stocks in U.S. Fluctuate as S&P 500 Heads for Its Best December Since 1991

December 31st, 2010

U.S. stocks swung between gains and losses, with the Standard & Poor’s 500 Index heading for its second straight annual advance and its best December since 1991.

Hewlett-Packard Co. and Microsoft Corp. fell at least 0.7 percent to lead losses in the Dow Jones Industrial Average. CVS Caremark Corp. gained 0.1 percent after the drugstore operator agreed to buy a unit of Universal American Financial Corp. Borders Group Inc. slumped 19 percent after suspending payments to some publishers. Alcoa Inc. rose 1.6 percent for the biggest gain in the Dow.

The S&P 500 fell less than 0.1 percent to 1,257.69 as of 11:21 a.m. in New York. The index has climbed 13 percent this year and 6.5 percent this month. The Dow slipped 1.66 points, or less than 0.1 percent, to 11,568.05 today, and is up 11 percent this year. The 2010 advance follows a 23 percent rise in the S&P 500 in 2009, making it the biggest two-year advance since the Internet-bubble rally of 1998 and 1999.

“This year has been like a long road trip. It wasn’t always pleasant while on the way, but it was good once we reached the destination,” said Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $340 billion. “Today we have skeleton crews at investment houses and trading shops so it’s likely going to be a very light day.”

Earnings, Fed Moves

The S&P 500 advanced 23 percent from its July low through yesterday as companies reported better-than-estimated earnings and the Federal Reserve pledged to buy up to an extra $600 billion in Treasuries to stimulate the economy. Its rally to a two-year high has pushed its valuation to 15.7 times reported profits, the most since June.

This year’s increase for the benchmark index for U.S. equities means the gauge has risen for seven of the past eight years. The index’s 86 percent surge from a 12-year low on March 9, 2009, is the biggest for a comparable time period since 1955, according to Howard Silverblatt, senior index analyst at S&P.

The S&P 500’s advance sent the gauge above 1,251.70 on Dec. 21 for the first time since Sept. 12, 2008, the last trading day before Lehman Brothers Holdings Inc. filed the world’s biggest bankruptcy and prompted a 46 percent drop for the benchmark gauge through March 2009. The December rally for the benchmark index comes after it lost 0.2 percent in November and posted a combined gain of 13 percent in September and October, the biggest increase during those months since 1998.

‘Optimistic’ on 2011

“I’m quite optimistic about the performance of equity markets in the year ahead,” said Andrew Popper, chief investment officer at SG Hambros Bank Ltd. in London. “We have the conditions in place for seeing this rally continuing. The economy is recovering at a global level.”

The benchmark gauge for American equities will rise 9.2 percent from yesterday’s close of 1,257.88 to 1,374 in 2011, bringing the increase since 2008 to 52 percent, according to the average of 11 strategists in a Bloomberg News survey.

Hewlett-Packard, the world’s largest computer maker, retreated 0.9 percent to $41.89 and Microsoft fell 0.7 percent to $27.67 as technology companies led declines in the S&P 500, dropping 0.4 percent as a group.

CVS Caremark gained 0.1 percent to $35.04. The drugstore operator said it will acquire the Medicare Part D business of Universal American Financial for about $1.25 billion. Universal American surged 37 percent to $20.

Clearwire Corp., a company creating a nationwide high-speed wireless network using WiMax technology, slumped 1.3 percent to $5.15 after it said Chairman Craig McCaw will step down today.

Borders slumped 19 percent to 93 cents. The bookstore chain has suspended payments to some publishers as refinancing talks continue, the Wall Street Journal reported, citing Publishers Marketplace.

Alcoa, the largest U.S. aluminum producer, rose 1.6 percent to $15.44.

Imax Corp. rallied 11 percent to $29.79. Sony Corp. may be preparing to bid more than $40 a share for the company that designs and makes giant-screen movie theaters, the Daily Mail reported, citing London traders. Walt Disney Co. may also be interested in bidding for Imax, the newspaper said.

 - Nikolaj Gammeltoft in New York at Bloomberg.