NEW YORK, March 1 — Wall Street’s main indexes fell slightly yesterday as support from better-than-feared US GDP data was countered by concerns about earnings and US-China trade relations.
Also yesterday, President Donald Trump said he had walked out of his Vietnam summit with Kim Jong-un because of demands from the North Korean leader to lift US-led sanctions.
Commerce Department data yesterday showed that while the US economy missed a 3 per cent annual growth target for 2018, a better-than-expected fourth quarter pushed gross domestic product up 2.9 per cent for the year.
But investors were cautious, nothing that the S&P has risen 11 per cent year-to-date at the same time as expectations for current quarter earnings have turned negative.
That’s a “disconnect that needs to be reconciled” said Terry Sandven, portfolio manager and chief equity strategist at US Bank in Minneapolis.
Wall Street analysts now expect first-quarter earnings to fall 1.1 per cent compared with Jan. 1 estimates for 5.3 per cent growth, according to IBES data from Refinitiv.
“This week we’ve lacked directional drivers. Fourth quarter earnings is coming to a quick close and there’s been no news on the US-China trade negotiations. On balance, we’re due for a period of consolidation and retrenchment,” said Sandven.
Investors were also unimpressed by White House economic adviser Larry Kudlow’s assurance yesterday that US-China trade negotiations were moving forward after “fantastic” progress made last week.
“Unlike a month ago, where a statement by an official was probably sufficient to push stocks higher, it no longer is. It’s time for concrete progress,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York.
“What’s pushing markets down and counterpointing GDP is the concern about corporate earnings.”
The Dow Jones Industrial Average fell 69.16 points, or 0.27 per cent, to 25,916, the S&P 500 lost 7.89 points, or 0.28 per cent, to 2,784.49 and the Nasdaq Composite dropped 21.98 points, or 0.29 per cent, to 7,532.53.
The S&P and Dow both registered their third straight day of losses yesterday.
Of the 11 major S&P 500 sectors, the materials sector was the biggest percentage decliner with a 1.27 per cent drop, while the energy sector was the second biggest percentage loser, with a 0.97 per cent fall.
The healthcare sector fell 0.3 per cent with drags from UnitedHealth, down 3 per cent on concerns about the potential for a single-payer US healthcare system.
Also, Celgene Corp fell 8.6 per cent after activist investor Starboard Value LP said it will vote against drugmaker Bristol-Myers Squibb Co’s proposed US$74 billion acquisition of the biotech company. Bristol-Myers rose 1.4 per cent.
Booking Holdings Inc fell 10.96 per cent after missing quarterly earnings expectations and was the biggest single-stock drag on the S&P. Also dragging on the S&P was HP Inc, which plunged about 17.3 per cent after it reported revenue that missed analysts’ estimates.
Monster Beverage Corp jumped 8.7 per cent, making it the biggest per centage gainer on the S&P, after it beat Wall Street estimates for quarterly revenue and profit.
Declining issues outnumbered advancing ones on the NYSE by a 1.30-to-1 ratio; on Nasdaq, a 1.41-to-1 ratio favored decliners.
The S&P 500 posted 40 new 52-week highs and two new lows; the Nasdaq Composite recorded 57 new highs and 34 new lows.
Volume on US exchanges was 8.22 billion shares, compared to the 7.34 billion-share average for the last 20 sessions. — Reuters
