Closing Market Summary: Stocks Close a 'Wee Bit' Lower on St. Patrick's DayDefying the spirit of St. Patrick's Day, the major averages failed to turn shamrock green, closing just a 'wee bit' below their flat lines. The Nasdaq finished flat while the S&P 500 and the Dow closed with losses of 0.1% apiece.
The bulls swiped up the majority of sectors on Friday, but the ones they left behind--financials (-1.1%), health care (-0.5%), energy (-0.1%), and consumer staples (-0.2%)--proved to be influential. The financial sector saw some belated selling pressure in the wake of this week's FOMC meeting as investors tried to sort out how the Fed's future outlook for interest rates will bake into the industry's bottom line.
On the other hand, the health care group got tripped up this morning on news that biotech giant Amgen's (AMGN 168.41, -11.70) new cholesterol drug Repatha didn't live up to expectations in a clinical trail. AMGN shares lost 6.5% of their value, which influenced the iShares Nasdaq Biotechnology ETF (IBB 295.28, -3.31) lower by 1.1%.
The lightly-weighted utilities (+0.6%), telecom services (+0.6%), and materials (+0.5%) sectors made a valiant effort to counter the heavy blow from the bears, but received little help from its peers; the technology (+0.1%) and consumer discretionary (+0.1%) sectors just couldn't piece together a truly solid performance as their top components deferred a leadership role in the cause.
News flow was relatively light on Friday, but it's worth pointing out that Secretary of State Rex Tillerson said all options are on the table, including military action, in countering North Korea's threat to the United States and its allies. Mr. Tillerson emphasized that the U.S. aims to avoid a military conflict, but made it clear that the "policy of strategic patience has ended."
Aerospace & defense names like Boeing (BA 180.10, +1.91), Lockheed Martin (LMT 271.98, +4.04), and Raytheon (RTN 156.97, +3.31) did their part to push the industrial sector (+0.4%) higher, but the sector's advance ultimately proved to be modest.
In the Treasury market, U.S. sovereign debt extended its week-to-date gain on Friday, leaving the benchmark 10-yr yield four basis points lower at 2.50%. For the week, the 10-yr yield lost eight basis points as investors relished in the Fed's more dovish than expected rate projections.
Friday saw a handful of economic reports, including February Industrial Production, February Leading Indicators, and the University of Michigan Sentiment Index for March, but their influence was minimal:
- Industrial Production held steady in February (consensus 0.2%) while Capacity Utilization declined to 75.4% (consensus 75.4%) from a revised reading of 75.5% (from 75.3%) in January.
- The key takeaway from the report is that it is not as disappointing as the headline suggests. Nevertheless, total industrial production is still weak, up just 0.3% year-over-year. The overall capacity utilization rate of 75.4% is 4.5 percentage points below its long-run average, which suggests there is ample overhead space still until production bottlenecks occur.
- The Conference Board's Leading Indicators report for February ticked up 0.6% (consensus 0.5%) after a 0.6% increase in January.
- The key takeaway from the report is that the index is at its highest level in over a decade after six consecutive monthly gains, fueling the underlying belief that economic growth in 2017 should be improving.
- The preliminary reading of the University of Michigan Consumer Sentiment Index for March rose to 97.6 (consensus 96.8) from 96.3 in the prior month's reading.
- The key takeaway from the report is that consumers are feeling better about their current personal finances; however, there appears to be a sharp divide about the outlook that cuts sharply across political partisan lines.
Investors will not receive any economic data on Monday.
- Nasdaq Composite +9.6% YTD
- S&P 500 +6.2% YTD
- Dow Jones Industrial Average +5.8% YTD
- Russell 2000 +2.5% YTD
