Stock Market News For March 2, 2018

Benchmarks closed in the red on Thursday after President Trump said that new tariffs will be imposed on aluminum and steel imports by the U.S. next week. After this development, all the three key indexes started this month with heavy losses following concerns over a possible trade war and aggravated worries over higher inflation.

The market’s fear gauge rose to its highest level since early February, moving above 20. A reading above 20 is considered alarming and indicates that the broader market is in turmoil. All the three indexes continued to decline for three consecutive trading days with the Dow down 0.4% for the year. However, the S&P 500 and Nasdaq are still up 0.4% and 4%, respectively, for 2018.

How the Benchmarks Fared?

The Dow Jones Industrial Average (DJI) decreased 1.7%, or 428.21 points, to close at 24,608.98. The S&P 500 fell 1.4% to close at 2,677.67. The tech-laden Nasdaq Composite Index closed at 7,180.56, losing 1.3%. The fear-gauge CBOE Volatility Index (VIX) increased 11.7% to close at 22.17. A total of 9 billion shares were traded on Thursday, higher than the last 20-session average of 8.4 billion shares. Decliners outnumbered advancers on the NYSE by a 1.47-to-1 ratio. On Nasdaq, a 1.42-to-1 ratio favored declining issues.

Markets Stumbles for Three Straight Days

On Thursday, President Trump said the U.S. will announce new tariffs of 25% on steel imports and 10% on aluminum imports next week. He added that this move will come as the U.S. will be “going to build our steel industry back and our aluminum industry back.” Following this announcement, fears of a possible retaliation from countries like China and Canada and the European Union heightened.

Additionally, worries over inflation arose following this development as such tariffs might lead to an increase in prices of imports. This in turn may raise the overall price level. Investors switched from equities to bonds on Thursday, following which bond prices increased. Rise in bond prices weighed on the yield of 10-year Treasury note, which fell from 2.870% Wednesday to 2.802% on Thursday, its worst fall in six months.

The Dow lost more than 420 points on Thursday. For the S&P 500 index, 10 of the 11 sectors finished in the red with industrials and financials emerging as the biggest drag on the S&P 500. The Industrial Select Sector SPDR (XLI) decreased 2%, becoming the worst performer among the S&P 500 sectors. Consumers of steel and aluminum registered sharp declines following Trump’s announcement of new tariffs. Dow components, United Technologies Corporation (NYSE:UTX) , The Boeing Company (NYSE:BA) and 3M Company (NYSE:MMM) fell 3.3%, 3.5% and 1.8%, respectively.

Additionally, the Financial Select Sector SPDR (XLF) declined 1.8% and was the second biggest loser among the key S&P 500 sectors. Some of its key holdings including, Citigroup Inc. (NYSE:C) and JPMorgan Chase & Co. (NYSE:JPM) slumped 2.4% and 1.8%, respectively. Both the companies have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ISM Manufacturing Index Best In 13 Years

Earlier in the day, sentiments had improved after manufacturing sector activity reached its highest level in thirteen years. The ISM manufacturing index rose from 59.1% in January to 60.8% in January, registering its best performance since May 2004. The metric was also higher than the consensus estimate of 58.6%.

U.S. construction spending remained unchanged in January, per the U.S. Census Bureau. Moreover, the U.S. Department of Commerce reported that personal spending increased 0.2% in the first month of this year. Also, personal income increased by 0.4% or $64.7 billion in January, more than the consensus estimate of 0.3% gain.

Additionally, the personal consumption expenditure price index (PCE) rose 0.4% in January, while, core PCE increased 0.3%. However, both PCE and core PCE advanced 1.7% and 1.5%, respectively in the last 12 months, remaining flat for the third straight month, well below the Fed’s targeted level of 2%.

Stocks That Made Headline

AMC Entertainment Beats on Earnings and Revenues in Q4

AMC Entertainment Holdings (NYSE:C) reported encouraging fourth-quarter 2017 results, wherein both the bottom line and top line surpassed the Zacks Consensus Estimate. (Read More)

Gap Jumps on Q4 Earnings & Sales Beat, Guides FY18

The Gap Inc. (NYSE:GPS) reported better-than-expected fourth-quarter results. (Read More)

AMC Networks Q4 Earnings Beat, Revenues Lag Estimates

AMC Networks (NYSE:C) reported mixed results in the fourth quarter of 2017. (Read More)

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