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Closing Market Summary: Indices End Mixed as Health Care Weighs

The stock market finished the day on a mixed note as the major averages recovered from steeper opening declines. Today's trade saw equity markets moving in tandem with oil, as participants weighed a disappointing reading of the February Retail Sales report against a data heavy week that will include the latest policy decision from the Fed. Furthermore, the underperformance of the heavily-weighted health care sector (-1.6%) kept pressure on the major indices throughout today's session. The Nasdaq Composite (-0.5%) finished the day behind the S&P 500 (-0.2%) and the Dow Jones Industrial Average (+0.1%).

Equity markets saw their largest losses at the start of today's session as participants eyed the February Retail sales figures. The report showed a contraction in February and also revealed a negative revision to January's reading (to -0.4% from +0.2%). The major indices spent the bulk of today's trade moving off their early lows as investors shifted their focus to the remainder of the data heavy week, and the highly anticipated March policy statement from the Fed.

Six sectors ended the day in negative territory with health care (-1.6%), materials (-0.9%), and energy (-0.1%) rounding out the leaderboard. Meanwhile, the heavyweight technology sector (+0.4%) managed to top countercyclical utilities (+0.2%), consumer staples (+0.2%), and telecom services (+0.2%) to finish in the lead.

Biotechnology underperformed in the health care space (-1.6%) as the iShares Nasdaq Biotechnology ETF (IBB 251.47, -9.97) plunged 3.8%. The sub-group traded lower throughout the session with Valeant Pharmaceuticals (VRX 33.51, -35.53), which sank 51.5% after reporting below-consensus fourth quarter results and guiding below consensus. To be fair though, McKesson (MCK 157.30, -7.69) and Pfizer (PFE 29.54, -0.56) also markedly underperformed.

The commodity-sensitive energy (-0.1%) and materials (-0.9%) spaces responded to a 2.3% ($36.33/bbl) tumble in crude oil. Today's downtick looked to be a continuation of yesterday's fall following Iran's announcement that it would not join in production freeze efforts until it regained its pre-sanction market share. As a result, pipeline names and independent oil and companies sported the largest losses in the sector. Elsewhere, Dow component Chevron (CVX 94.27, +0.01) managed to finish its day in positive territory as the sector enjoyed an end of the day bid. 

Meanwhile, the heavyweight technology sector (+0.4%) managed to lend support to the broader market as large cap constituent Apple (AAPL 104.58, +2.06) jumped 2.0%. The tech giant responded to a note from Morgan Stanley, which cited promising iPhone demand. Meanwhile, fellow sector heavyweights were able to garner buying interest near their lows.

The economically-sensitive financial sector (-0.1%) initially weighed on the broader market, but was able to move up to trade in-line with the benchmark index. On that note, JPMorgan Chase (JPM 59.20, +0.08) was able to recover from a 1.0% loss to end its day higher by 0.1%.

Treasuries carved out their session highs during the market's initial tumble, but slipped from those highs throughout the session. The yield on the 10-yr note ended unchanged at 1.97%.

The U.S. Dollar Index (96.61, -0.01) ended its day relatively unchanged despite its early vacillation. The euro/dollar pair ended at 1.1111 (+0.1%) after ticking off a session low of 1.1073. Separately, the dollar/yen pair ended lower by 0.6% at 113.10.

Today's volume was one again lighter than the recent average as fewer than 809 million shares changed hands on the NYSE floor.

Today's economic data included February Retail Sales, February PPI, and March Empire Manufacturing, Business Inventories for January, and the NAHB Housing Market Index for March:

• Retail sales declined 0.1% in February as expected while sales, excluding autos, also declined 0.1% (consensus -0.2%).
  • The minus signs aren't comforting to see, yet the added source of discomfort is that January retail sales were revised lower. Specifically, total retail sales for January were revised to -0.4% from +0.2% while sales excluding autos were also revised to -0.4% from +0.1%.
  • The February report saw its share of minus signs in it, the most prominent of which was the 4.4% decline in gasoline station sales, which weighed on the overall result.
  • The retail categories that did enjoy sales gains were building materials (+1.6%), sporting goods (+1.2%), food services and drinking places (+1.0%), clothing and accessories (+0.9%), and health and personal care stores (+0.7%). Core retail sales, which exclude gasoline station, auto, and building material sales,were up just 0.1% and were revised down to a 0.1% decline in January (from +0.4%).
  • Core sales factor into the goods component of personal consumption expenditures for the GDP report, so this isn't the best of news as it relates to first quarter GDP.
• The February Producer Price Index report revealed a 0.2% decline in final demand prices (consensus -0.2%) and an unchanged reading for core PPI, which excludes food and energy (consensus +0.1%).
  • On an unadjusted basis, the final demand index is unchanged over the last 12 months while core PPI is up 1.2%. Not much inflation pressure there.
• The Empire Manufacturing Survey isn't going to move the Fed's policy dial either, although it was much better than expected at 0.6 for March (consensus -9.5).
  • That was the first positive reading since last July thanks to increases in the indexes for both new orders and shipments
• Total business inventories increased 0.1% in January, which was slightly above the consensus estimate that called for no change.
  • Business inventories for December were revised down to unchanged from an originally reported increase of 0.1%.
  • Manufacturer inventories (-0.4%) and merchant wholesaler inventories (+0.3%) were already known. Retailer inventories were the only unknown and they increased 0.3% on top of a 0.4% increase in December.
  • The breakdown of retailer inventories showed increases in all areas, except furniture and home furnishings (-0.5%) and department stores (-0.5%). Motor vehicle and parts dealers inventories were up 0.6%.
  • The total business inventory-to-sales ratio pushed up to 1.40 from 1.39 in January. In January 2015 the ratio stood at 1.36.
• The NAHB Housing Market Index for March came in at 58 from an unrevised reading of 58 in February while the consensus expected 59.0.

Tomorrow's economic data includes the weekly MBA Mortgage Index set to be released at 7:00 ET. Meanwhile, February CPI (consensus -0.2%) and Core CPI (consensus +0.1%), February Housing Starts (consensus 1137k), and February Building Permits (consensus 1204k) will be released at 8:30 ET. Separately, the February Industrial Production Report (consensus -0.3%) and Capacity Utilization (consensus 76.9%) will cross the wires at 9:15 ET. Finally, the Federal Open Market Committee's March rate decision will be announced at 14:00 ET.

• Russell 2000 -6.1% YTD
• Nasdaq Composite -5.6% YTD
• S&P 500 -1.4% YTD
• Dow Jones -1.0% YTD