Stocks took a dip as investor enthusiasm eased on Wednesday, with important economic reports coming on Thursday and Friday.
Stocks headed slightly lower on Wednesday, as investors awaited Thursday’s report on Retail Sales from the Commerce Department’s Census Bureau, as well as Friday’s release of the preliminary reading on the Thompson Reuters/University of Michigan Consumer Sentiment Index for February. Since the American economy is 70 percent consumer-driven, investors pay close attention to these reports, because they are seen as forward-looking indicators on the direction of the economy. Both of these indicators are expected to decline.
The Dow Jones Industrial Average (DIA) lost 30 points to finish Wednesday’s trading session at 15,963 for a 0.10 percent decline. The S&P 500 (SPY) dipped 0.03 percent to close at 1,819.
The Nasdaq 100 (QQQ) rose 0.16 percent to finish at 3,627. The Russell 2000 (IWM) advanced 0.30 percent to end the day at 1,132.
In other major markets, oil (USO) climbed 0.45 percent to close at $35.80.
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced 11 cents (0.10 percent) to $108.29/bbl. (BNO).
April gold futures advanced $1.50 (0.12 percent) to $1,291.30 per ounce (GLD).
The transportation sector flew above the storm clouds on Wednesday, as the Dow Jones Transportation Average rose 0.13 percent to 7,263, coming up short of its 50-day moving average of 7,272 (IYT).
In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks advanced as the exchange rate for the yen weakened to 102.52 per dollar during Wednesday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average advanced 0.56 percent to 14,800 (EWJ).
A report from China’s General Administration of Customs, indicating that the nation’s exports increased by 10.6 percent in January on a year-over-year basis, has raised a good deal of skepticism from around the world. The report gave some traction to recent criticism by PIMCO’s Bill Gross that suspicions about the credibility of China’s economic data have caused Chinese investments to become “mystery meat” (because you don’t know what you are getting). The Shanghai Composite Index advanced 0.30 percent to 2,109 (FXI). Hong Kong’s Hang Seng Index jumped 1.45 percent to 22,285 (EWH).
In Europe, mining companies and the financial sector led Wednesday’s stock market advance. Rio Tinto and Glencore Xstrata rose higher than one percent each. ING Groep jumped 3.64 percent and Société Générale soared 4.71 percent. The Euro STOXX 50 Index finished Wednesday’s session with a 0.58 percent advance to 3,094 – climbing further above its 50-day moving average of 3,047. Its Relative Strength Index is 57.49 (FEZ).
Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,809, despite a 0.03 percent dip, to finish Wednesday’s trading session at 1,819. Its Relative Strength Index (RSI) slipped from 55.55 to 55.40. The MACD is climbing above the signal line, suggesting that the S&P could resume its advance during the immediate future.
On Wednesday, four sectors advanced, three sectors declined and two sectors were unchanged.
Consumer Discretionary (XLY): +0.09%
Technology: (XLK): +0.39%
Industrials (XLI): +0.57%
Materials: (XLB): -0.18%
Energy (XLE): -0.24%
Financials: (XLF): unchanged
Utilities (XLU): +0.13%
Health Care: (XLV): unchanged
Consumer Staples (XLP): -0.43%
Bottom line: Stocks made a slight retreat on Wednesday, as investors remained cautious ahead of Thursday’s report on Retail Sales and Friday’s release of the preliminary reading on the Thompson Reuters/University of Michigan Consumer Sentiment Index for February.
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