Closing Stock Market SummaryRisk-off trading, driven by worries about the banking sector, was back in play today. Selling interest in the financial sector picked up after Credit Suisse's (CS 2.16, -0.35, -13.9%) largest shareholder, Saudi National Bank, said it cannot provide further financial help because of regulatory constraints.
The sticking point for market participants was that the aforementioned news brought worries about banks being more risk-averse, tightening lending standards and managing their balance sheets more conservatively, to the forefront. Those measures would slow economic growth and lead to further downward revisions to earnings estimates. So, it was not surprising today that cyclical areas of the market were under the most pressure.
Market participants also received some weaker-than-expected retail sales and producer price data for February, which added to the worries about growth prospects.
By the close, however, things had changed noticeably in the market. Some nice gains in the mega cap space had the main indices close near their best levels of the day. The Vanguard Mega Cap Growth ETF (MGK) rose 0.3%. The S&P 500, which hit 3,838 at the low for the day, brushed up against the 3,900 level in the afternoon trade. The Nasdaq for its part was able to squeeze out a slim gain.
The upside moves were also helped along by the Swiss National Bank saying "Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide CS with liquidity."
The risk-off mentality had not totally abated by the close, though, and there was notable weakness under the surface. The Invesco S&P 500 Equal Weight ETF (RSP) fell 1.4%. Even JPMorgan Chase (JPM 128.26, -6.36, -4.7%), which outperformed in recent sessions due to a belief that it may benefit from fallout at other banks, fell nearly 5.0% today. The SPDR S&P Bank ETF (KBE) fell 2.0% and the SPDR S&P Regional Banking ETF (KRE) fell 1.6%.
Treasury yields declined today in a continued safe-haven bid, but buying dissipated somewhat at the same time that the stock market was improving. The 2-yr note yield fell 25 basis points to 3.83% after scraping 3.71% shortly before the stock market opened. The 10-yr note yield fell 15 basis points to 3.49%, having hit 3.40% a few hours ago.
The S&P 500 energy sector (-5.4%) was the worst performer by a wide margin as oil prices plunged. WTI crude oil futures fell 4.4% to $68.11/bbl. The S&P 500 materials sector fell 3.3%, the S&P 500 financial sector fell 2.8%, and the S&P 500 industrial sector fell 2.5%.
Meanwhile, the communication services (+1.5%) and utilities (+1.3%) sectors were the top performers today.
- Nasdaq Composite: +9.2% YTD
- S&P 500: +1.4% YTD
- S&P Midcap 400: -1.4% YTD
- Russell 2000: -0.9% YTD
- Dow Jones Industrial Average: -3.8% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index 6.5%; Prior 7.4%
- March Empire State Manufacturing -24.6 (consensus -8.0); Prior -5.8
- February Retail Sales -0.4% (consensus 0.2%); Prior was revised to 3.2% from 3.0%; February Retail Sales ex-auto -0.1% ( consensus -0.1%); Prior was revised to 2.4% from 2.3%
- The key takeaway from the report is that there were declines in most retail sales categories following large gains in January, suggesting consumers were more cognizant about crimping their spending on goods.
- February PPI -0.1% (consensus 0.3%); Prior was revised to 0.3% from 0.7%; February Core PPI 0.0% (consensus 0.4%); Prior was revised to 0.1% from 0.5%
- The key takeaway is that this should be seen by the Fed as a pleasing inflation report, as it also featured month-over-month declines in pipeline measures that include the index for processed goods for intermediate demand (-0.4%) and the index for unprocessed goods for intermediate demand (-3.8%).
- January Business Inventories -0.1% ( consensus 0.0%); Prior 0.3%
- March NAHB Housing Market Index 44 (consensus 42); Prior 42
Looking ahead to Thursday, market participants will receive the following economic data:
- 8:30 ET: Weekly Initial Claims ( consensus 215,000; prior 211,000), Continuing Claims (prior 1.718 mln), February Housing Starts (consensus 1.313 mln; prior 1.309 mln), Building Permits (consensus 1.345 mln; prior 1.339 mln), March Philadelphia Fed survey ( consensus -13.0; prior -24.3), February Import Prices (prior -0.2%), Import Prices ex-oil (prior 0.3%), Export Prices (prior 0.8%), and Export Prices ex-agriculture (prior 0.8%)
- 10:30 ET: Weekly natural gas inventories (prior -84 bcf)
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