Dow Jones Industrial Average Falls As Weak Economic Data Overshadow Trade-Talk

Stocks fell Thursday, with the NASDAQ's eight-session winning streak poised to end, as fresh economic data out of Europe and Japan suggest further slowing in global growth. However, the fears about a worldwide slowdown were somewhat muted by reports that U.S. and Chinese negotiators were beginning to outline a deal to end a long-running trade spat

How are the major benchmarks performing?

The Dow Jones Industrial Average was down points, or 0.2%, to 2,778, while the Nasdaq Composite COMP, -0.58% dropped 12 points, or 0.2%, to 7,476.

What’s driving the market?

U.S. and Chinese negotiators have started to iron out specific details of a possible trade deal, Reuters reported, citing sources it called familiar with the talks. The report said agreements in principle are being drawn up in six key areas: forced technology transfers and cyber theft, intellectual-property rights, services, currency, agriculture and nontariff barriers to trade.

Negotiators have continued talks in Washington this week, following a round of discussions last week in Beijing. President Donald Trump earlier said that a March 1 deadline isn’t a “magical” date, which investors took as a sign that tariffs on imports of Chinese goods may not automatically rise next month if progress continues toward a deal.

Concerns about slowing global growth were underscored by the release of surveys from Europe and Japan that showed manufacturing contracting in February, with export-dependent German manufacturers reporting the worst drop in activity in more than six years.

What data is in focus?

Durable-goods orders rose by 1.2% in December, below the 1.4% expected by economists, according to a MarketWatch poll. Outside of orders for airplanes and automobiles, orders rose just 0.1%. Meanwhile, a key measure of business investment, known as core orders, slipped 0.7% in December.

Manufacturing activity declined in Pennsylvania, Delaware and New Jersey in February, for the first time since May of 2016, according to the Philly Fed manufacturing index. The index fell to a seasonally adjusted reading of -4.1 from 17 in January.

New claims for jobless benefits dropped to a seasonally-adjusted 216,000 during the week ended Feb. 16, below the 229,000 expected by economists polled by MarketWatch.

U.S. private-sector output growth rose in February at a faster rate than January, according to the Markit PMI composite survey of both the manufacturing and services sectors. The index rose to a seasonally adjusted level of 55.8 in February from 54.4 in January.

The Conference Board’s leading-economic-indicators index declined 0.1% in January to 111.3, following no change in December.

Existing home sales fell 1.2% in January to a seasonally adjusted annual rate of 4.94 million homes, the National Association of Realtors. It marks the third straight month of declines.

What are analysts saying?

Wayne Wicker, chief investment officer at Vantagepoint Investment Advisors, said that the market’s weakness can be partly attributed to investors’ tendency to “buy the rumor and sell the news.”

“Stocks have gained momentum recently because people are thinking that the U.S. and China are going to accomplish something on trade” in the coming weeks and months, Wicker said. But this optimism can only take the market so far. Meanwhile, “investors were pushed into reality by the economic reports this morning,” which provide more evidence that the U.S. economy will see materially slower growth this year than last, he added.

“The December durable-goods data suggest that equipment investment growth slowed further in the fourth quarter, and we expect it to remain weak for most of this year,” wrote Andrew Hunter, senior U.S. economist with Capital Economics, in a research note. “Unfortunately, there looks to be little prospect of a rebound in investment growth soon.”

What stocks are in focus?

Tesla (NASDAQ:TSLA) Inc. shares TSLA, -3.26% slid 2.2% after Consumer Reports withdrew its recommendation of the Model 3 due to “declining reliability.”

Shares of Dow component Nike Inc (NYSE:NKE). NKE, -1.39% fell 1.4%. The sports apparel and equipment company was in the spotlight after Duke University basketball sensation Zion Williamson was lost to a knee injury seconds into a game against archrival North Carolina, when his foot slid on the floor and his Nike shoe came apart.

Avis Budget Group Inc. shares CAR, +17.82% rallied 17% after the company reported fourth-quarter financial results that showed the car-rental company outpacing expectations.

Shares of Domino’s Pizza Inc. DPZ, -9.02% skidded 9.2% after the global chain reported fourth-quarter earnings, revenue and same-store sales that fell short of Wall Street expectations.

Newmont Mining Corp (NYSE:NEM). shares NEM, +0.08% edged up 0.2% after the gold miner beat profit and sales expectations for the fourth quarter.

Shares of Albermarle Corp. ALB, +6.77% rose 6.6% after the lithium producer released better-than-expected quarterly earnings.

How are other markets trading?

Stocks in Asia closed mixed, with Japan’s Nikkei 225 rising 0.2%, while China’s Shanghai Composite Index fell 0.3% and Hong Kong’s Hang Seng Index added 0.4%. In Europe, the Stoxx Europe 600 SXXP, -0.28% edged lower.

Oil prices CLJ9, -0.44% weakened, while the price of gold GCJ9, -1.41% also declined and the U.S. dollar US Dollar Index, +0.11% gained against peers.

William Watts contributed to this report.

The SPDR Dow Jones Industrial Average (NYSE:DIA) ETF Trust (DIA) was trading at $257.65 per share on Thursday afternoon, down $1.85 (-0.71%). Year-to-date, DIA has gained 5.02%, versus a 4.03% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 82 ETFs in the Large Cap Value ETFs category.

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