Markets closed in the red on Tuesday as investors refrained from betting big due to lack of any additional factors which would boost stocks. Markets watchers continued to wait for concrete developments on the U.S-China trade talks front. Meanwhile, China lowered the growth forecast for its economy in 2019, which further dampened investors’ sentiments. Also, the three major benchmarks ended in the red.
The Dow Jones Industrial Average (DJI) decreased 0.1%, to close at 25,806.63. The S&P 500 decreased 0.4% to close at 2,792.62. The tech-laden Nasdaq Composite Index closed at 7,576.36, losing 0.02%. The fear-gauge CBOE Volatility Index (VIX) increased 2.7% to close at 15.02. Decliners outnumbered advancers on the NYSE by a 1.01-to-1 ratio. On Nasdaq, a 1.02-to-1 ratio favored declining issues.
How Did the Benchmarks Perform?
The Dow lost 13 points to end the session in negative territory. Losses for the 30-stock index were buoyed by a dip of about 2.1% in the shares of Walgreens Boots Alliance, Inc. WBA.
The S&P 500 declined 3.2 points to also end in the red. Of the 11 major sectors of the S&P 500, eight ended in the negative territory, with industrials and materials leading the decliners. The Industrial Select Sector SPDR ETF (XLI) and the Materials Select Sector SPDR ETF (XLB) lost 0.6% and 0.5%, respectively.
Meanwhile, the Nasdaq lost 1.2 points to also end in negative territory. Notably, the tech laden index ended the session just below its breakeven point at 7,576.36. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lack of Visible Catalysts Weighed on the Markets
On Mar 4, reports surfaced that the United States and China were in the final stages of closing a trade deal. China is believed to have agreed to reduce tariffs on farm, chemical, auto and other products from the United States. In return, America was considering nixing most of its sanctions on Chinese products.
However, lack of any other catalysts to boost the markets weighed heavily on investor sentiment. Further, market watchers waited for further solid developments on the trade front and refrained from indulging in heavy trading.
China Lowers in Growth Forecast for 2019
In a not so surprising move, China reduced the growth forecast for its economy in 2019 to between 6% and 6.5%. Chinese officials acknowledged the worsening economic conditions in country. Further, the slowdown in Chinese economy can only be countered by increasing debt levels which are already sky high.
Speaking at the opening of the annual session of China's legislature on Mar 5, the Chinese premier Li Keqiang addressed the issue and revealed plans to counter the slowdown while keeping the country’s unemployment rate steady.
Among solutions that Keqiang offered were stepping up deficit spending, introducing new tax cuts as well as offering fee rebates to businesses in the country, which would represent approximately 2% of the Chinese GDP. Finally, the premier also talked about increasing the bank lending to small as well as private companies by about 30%.
On the economic data front, the ISM Services Index for the month of February increased to 59.7%. The metric comfortably surpassed the consensus estimate for the period of an increase of 57.3%.
Meanwhile, the U.S. Commerce Department stated that New Home Sales for the month of December came in at 621,000, surpassing the consensus estimate of 593,000.
Stocks That Made Headlines
Hertz Drops 10% on Carl Icahn's Stake Cut: Cause for Worry?
Shares of Hertz Global Holdings HTZ declined approximately 10% at the close of business on Mar 5, following news of activist investor Carl Icahn’s stake reduction in the company. (Read More)
Chevron Banks on Permian, Prioritizes Cash Flow Growth
Chevron Corporation CVX recently issued a statement at its latest annual analyst day, highlighting its production plans and aggressive drilling strategies in the prolific Permian play. (Read More)
ExxonMobil Expects to Boost Permian Yield by Nearly 80%
Exxon Mobil Corporation XOM has made alterations in the Permian Basin growth plans and expects to boost production by roughly 80% compared with initial estimates. (Read More)
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