Wall Street closed in the red on Wednesday after the yield on 10-year US Treasury Note declined on global growth concerns. In the U.K. Brexit drama continued as Prime Minister Theresa May offered to resign if the Parliament approves her deal. All three major stock indexes finished in negative territory.
The Dow Jones Industrial Average (DJI) closed at 25,625.59, declining 0.1%. The S&P 500 Index (INX) dropped 0.5% to close at 2,805.37. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,643.38, shedding 0.6%. A total of 6.97 billion shares were traded on Wednesday, lower than the last 20-session average of 7.64 billion shares. Decliners outnumbered advancers on the NYSE by 1.26-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.39-to-1 ratio. The CBOE VIX increased 3.2% to close at 15.15.
How Did the Benchmarks Perform?
The Dow ended in negative territory reversing two-straight days of gains with 21 stocks of the 30-stocks blue-chip index finished in the red while nine ended in the green. The tech-heavy Nasdaq Composite finished in the red due to weak performance by large-cap tech stocks.
The S&P 500 also closed in the red but managed to end above the technically crucial 2,800 mark. The Health Care Select Sector SPDR (XLV) lost 0.8%. Notably, ten out of eleven sectors of the benchmark index closed in the red and only one finished in green.
10-year Treasury Yield Declines
On Mar 27, yield on benchmark 10-year US Treasury Note declined to its lowest level since December 2017. More and more investors opted for safe-haven options such as government bonds exiting risky equities following fears of a global economic slowdown.
China’s National Bureau of Statistics reported that profits at industrial firms fell by 14% during the January – February period, marking the largest decline since 2011. Moreover, the European Central Bank hinted at delaying further rate hikes and voiced concerns over negative interest rates due to a downturn in the Eurozone economy.
Consequently, yield on 10-year US Treasury Note declined to 2.39% from 2.42% on the previous day. Yield on 3-month US Treasury Note stood at 2.46%. The yield curve inversion between 3-month and 10-year Treasury Note has been continuing since Mar 22. This happened for the first time since 2007 and is considered by many economists as a sign of an impending recession.
Brexit Doldrums Continue
British Prime Minister Theresa May expressed her desire to step down from her post if the British Parliament passed her existing Brexit deal by a majority. This will pave the way for a new Prime Minister to negotiate the second round of Brexit terms with the European Union (EU). Earlier this month, the EU extended the Brexit dateline to May 12.
Crude Oil Prices Decline
On Mar 27, the Energy Information Administration of United States reported that U.S. crude supplies unexpectedly rose by 2.8 million barrels for the week ended Mar 22. Following the news, the U.S. benchmark, West Texas Intermediate crude for May delivery fell 53 cents or 0.9% to settle at $59.41 a barrel on the New York Mercantile Exchange. The global benchmark Brent crude for May delivery dropped 14 cents or 0.2% to $67.83 a barrel on ICE (NYSE:ICE) Futures Group.
Consequently, shares of major crude oil explorers like Chevron Corp. (NYSE:CVX) and Exxon Mobil Corp. (NYSE:XOM) declined 1.1% and 0.8%, respectively. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
U.S. trade deficit narrowed to $51.1 billion in January from $59.9 billion in December. January’s trade deficit was the lowest in five months. The consensus estimate was for a trade deficit of $57.4 billion.
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