Closing Stock Market Summary
It was a downbeat day for the stock market. The S&P 500 (-0.3%), Nasdaq Composite (-0.3%), and Dow Jones Industrial Average (-0.4%) closed off their session lows thanks to move higher in the last 30 minutes of trading, albeit still logging broad based declines. The Russell 2000 underperformed the broader market, sinking 2.0%.
The main focus was price action in the Treasury market, which pushed yields toward their highs from February. The 2-yr note yield rose seven basis points to 4.69% and the 10-yr note yield settled 11 basis points higher at 4.30%. This was largely in response to the February Producer Price Index report, which was hotter than expected.
Other data this morning also contributed to the selling, including a February retail sales report that was a bit weaker than expected but still up nicely versus the prior month, and some initial and continuing jobless claims data that reflected ongoing strength in the labor market.
Downside moves were relatively modest despite a growing sense among some participants that stocks are due for a pullback. The Invesco S&P 500 declined 0.9% and only one of the 11 S&P 500 sectors fell more than 0.8%.
The rate-sensitive real estate sector (-1.6%) was the worst performer followed by the utilities (-0.8%) sector. Meanwhile, only two sectors finished higher today. The energy sector jumped 1.1%, benefitting from positive movement in WTI crude oil futures ($81.23/bbl, +1.49, +1.9%) and natural gas futures ($1.74/mmbtu, +0.08, +4.8%).
Gains in some heavily-weighted names provided a measure of support to the broader market, but it wasn't enough to offset the broad declines elsewhere. Apple (AAPL 173.00, +1.87, +1.1%), Microsoft (MSFT 425.22, +10.12, +2.4%), Amazon.com (AMZN 178.75, +2.19, +1.2%), and Alphabet (GOOG 144.34, +3.57, +2.5%) were influential winners in that respect.
- S&P 500: +8.0% YTD
- Nasdaq Composite: +7.4% YTD
- S&P Midcap 400: +5.2% YTD
- Dow Jones Industrial Average: +3.2% YTD
- Russell 2000: +0.2% YTD
Reviewing today's economic data:
- February PPI 0.6% (consensus 0.3%); Prior 0.3%; February Core PPI 0.3% (consensus 0.2%); Prior 0.5%
- The key takeaway from the report is that goods inflation drove the increase; moreover, the PPI uptick will not assuage concerns about PCE inflation remaining sticky, which in turn means the Fed might embrace being stickier for longer with its current fed funds rate.
- February Retail Sales 0.6% (consensus 0.7%); Prior was revised to -1.1% from -0.8%; February Retail Sales ex-auto 0.3% ( consensus 0.5%); Prior was revised to -0.8% from -0.6%
- The key takeaway from the report is the sales rebound itself, which will quiet some of the concerns about the January downturn, and help the market maintain its soft landing outlook.
- Weekly Initial Claims 209K (consensus 218K); Prior was revised to 210K from 217K; Weekly Continuing Claims 1.811 mln; Prior was revised to 1.794 mln from 1.906 mln
- The key takeaway from the report is that it is suggestive of a labor market that, overall, remains in good shape given the low level of initial claims -- a leading indicator -- and the much improved continuing jobless claims number. (Note: this week's report reflects the annual revision to the weekly unemployment claims seasonal adjustment factors from 2019 forward.)
- January Business Inventories 0.0% (consensus 0.3%); Prior was revised to 0.3% from 0.4%
Friday's economic calendar features:
- 8:30 ET: February Import Prices (prior 0.8%), Import Prices ex-oil (prior 0.7%), Export Prices (prior 0.8%), Export Prices ex-agriculture (prior 0.9%), and March Empire State Manufacturing survey (consensus -8.0; prior -2.4)
- 9:15 ET: February Industrial Production (consensus 0.0%; prior -0.1%), and Capacity Utilization (consensus 78.4%; prior 78.5%)
- 10:00 ET: Preliminary March University of Michigan Consumer Sentiment (consensus 77.3; prior 76.9)