Closing Market Summary: Stocks Take Midweek Breather Following Tuesday Rally
The major averages posted modest Wednesday losses after spending the entire session inside narrow ranges. The Dow Jones Industrial Average slipped 0.2% while the S&P 500 shed less than a point. For its part, the Nasdaq Composite (+0.1%) ended just above its flat line.
Although today's session did not generate much (or any) excitement, it should be noted that equity indices essentially held their levels after yesterday's broad-based spike that sent the S&P 500 to a fresh record closing high.
Individual sectors were split right down the middle for the entire trading day with five groups posting gains while the other five registered losses.
The financial sector (+0.7%) took the lead shortly after the open and never relinquished its standing as top components rallied notably. Bank of America (BAC 17.25, +0.53) soared 3.2% while other large names like Citigroup (C 49.42, +0.59), JPMorgan Chase (JPM 58.16, +0.90), and Morgan Stanley (MS 31.97, +0.87) gained between 1.2% and 2.8%.
Today's outperformance of financials marked the second consecutive day of relative strength for a vital sector that has been struggling to keep pace with the broader market so far in 2014. Including today's gain, the sector extended its year-to-date advance to 0.9% versus a 1.4% gain for the S&P 500.
Financials notwithstanding, the remaining four advancers—consumer discretionary, industrials, materials, and technology—posted slim gains of no more than 0.3%. Of the four, the discretionary sector (+0.3%) had the best showing thanks to strength among media names.
On the downside, the four countercyclical sectors—consumer staples, health care, utilities, and telecom services—lost between 0.2% and 0.7% while the energy sector (-1.1%) spent the day in a steady retreat while crude oil fell 1.8% to $101.48/bbl.
The energy space slumped amid the weight of ExxonMobil (XOM 93.80, -2.72), which tumbled 2.8%, marking its largest daily decline since November 2012. Meanwhile, the broader sector widened its year-to-date loss to 2.7%. Only the telecom services sector has had a worse showing as it holds a 5.0% loss so far in 2014.
Treasuries ended modestly higher with the benchmark 10-yr yield down one basis point at 2.69%.
Also of note, today featured the release of the March Beige Book from the Federal Reserve. Similar to other reports received during past weeks, the Beige Book highlighted severe weather as a major headwind. To that end, ‘weather' was mentioned 119 times in the entire release versus an average of 14 mentions in each previous Beige Book report dating back to 1997.
Eight out of twelve Fed Districts reported continued expansion from January to February with the growth characterized as ‘modest' to ‘moderate.' Retail sales saw relative weakness across the board, but that was written off as a result of the weather.
With regards to employment, a gradual improvement was reported in most districts while pressure from wages was characterized as ‘stable.'
Investors received two other economic reports:
* The ADP Employment Change report for February indicated an increase of 139K while the consensus called for an increase of 150K. Also of note, the January reading was revised down to 127,000 from 175,000. * The ISM Non-Manufacturing Index fell to 51.6 in February from 54.0 in January. That was the weakest print since February 2010 while the consensus expected the index to fall to 53.5. Not surprisingly, many sectors reported that extreme winter weather conditions wreaked havoc on business activity in February. The evidence in the hard data, however, suggests a cyclical slowdown is more likely taking place. The Employment Index fell a whopping 8.9 points to 47.5 in February from 56.4 in January. That ended a 25-month expansion cycle.
Tomorrow, the February Challenger Job Cuts report will be released at 7:30 ET while weekly initial claims, fourth quarter productivity, and unit labor costs will be announced at 8:30 ET. The day's data will be topped off with the factory orders report for January.
* Nasdaq Composite +4.3% YTD * Russell 2000 +3.8% YTD * S&P 500 +1.4% YTD * Dow Jones Industrial Average -1.3% YTD