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Stocks fall, but close off lows, on trade and growth concerns
29-May-19 16:20 ET
Dow -221.36 at 25126.41, Nasdaq -60.04 at 7547.28, S&P -19.37 at 2783.02
briefing.com
[BRIEFING.COM] The S&P 500 was down as much as 1.3% on Wednesday amid trade and growth concerns, while the advance in U.S. Treasuries helped widen a key inversion within the yield curve. A rebound in the last hour of action, however, helped the benchmark index finish lower by 0.7% and reclaim its 200-day moving average (2776) after falling below the key technical level during the day.
The Dow Jones Industrial Average (-0.9%), the Nasdaq Composite (-0.8%), and the Russell 2000 (-0.9%) also finished off their session lows.
No S&P 500 sector finished higher, but the materials (-0.1%) and financials (-0.1%) sectors did finish just below their unchanged marks. The utilities (-1.3%) and real estate (-1.2%) sectors underperformed.
Contributing to the day's lows were Chinese state media suggesting that Beijing could use its dominant position in rare earth minerals to restrict exports in a trade war against the U.S. Although it was not a new claim, investors continued to seek safety in Treasuries with few signs of trade progress.
At one point during the day, the 3-month yield was 14 basis points higher than the 10-yr yield, which was its biggest difference since the financial crisis and helped feed into the persisting growth concerns. This term spread, according to research from the Federal Reserve Bank of San Francisco, is the most reliable predictor of a recession among the different term spreads.
Demand for U.S. Treasuries did lose traction during the afternoon, though, bringing yields slightly higher from session lows. The 2-yr yield finished four basis points lower at 2.08%, and the 10-yr yield finished three basis points lower at 2.23%. The U.S. Dollar Index increased 0.2% to 98.16. WTI crude declined 0.5% to $58.84/bbl.
The SPDR S&P Retail EFT (XRT 40.50, -0.92, -2.2%) was a notable laggard in the stock market following poor results and guidance from Abercrombie & Fitch (ANF 18.39, -6.62, -26.5%) and Canada Goose (GOOS 33.89, -15.13, -30.9%). General growth concerns also helped overlook upbeat results and guidance from Dick's Sporting Goods (DKS 33.67, -2.11, -5.9%).
On the other hand, the beaten-up Philadelphia Semiconductor Index (+0.4%) found some reprieve on Wednesday. Shares of Cypress Semiconductor (CY 17.25, +1.85, +12.0%) outperformed on reports that the company is considering a sale in response to takeover interest.
Separately, the weekly MBA Mortgage Applications Index declined 3.3% following a 2.4% increase in the prior week.
Looking ahead, investors will receive Personal Income and Spending data for April, the PCE Price Index for April, and the final reading for the University of Michigan Index of Consumer Sentiment for May on Thursday.
- Nasdaq Composite +13.8% YTD
- S&P 500 +11.0% YTD
- Russell 2000 +10.5% YTD
- Dow Jones Industrial Average +7.7% YTD
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