The S&P 500 fell 0.6% on Wednesday, as the market was pressured by profit-taking interest amid tempered hopes for a timely Russia-Ukraine ceasefire. The Nasdaq Composite (-1.2%) and Russell 2000 (-2.0%) posted steeper declines while the Dow Jones Industrial Average declined just 0.2%.
Briefly, Russia refuted yesterday’s reports that described a breakthrough in peace talks and appeared to redirect troops to eastern Ukraine to focus on the Donbas region. The news contributed to a rebound in oil prices ($107.67, +3.34, +3.2%), which were further aided by bullish inventory data out of the EIA.
The news also functioned as an excuse for the stock market to cool off from a big rebound rally in which, entering the session, the S&P 500 was up 11.0% since March 14 and the Nasdaq Composite was up 16.5%.
Losses were concentrated in the S&P 500 information technology (-1.4%), consumer discretionary (-1.5%), and financials (-0.7%) sectors. Conversely, the energy (+1.2%), utilities (+0.8%), health care (+0.2%), and consumer staples (+0.2%) sectors closed in positive territory.
The financials sector was undercut by weakness in the bank stocks amid the compression in interest rates, which continued to signal concerns about a Fed policy mistake. The SPDR S&P Bank ETF ( KBE 33.91, -1.07) dropped 3.1%.
The 2-yr yield decreased two basis points to 2.33%, and the 10-yr yield decreased four basis points to 2.36%. The U.S. Dollar Index fell 0.6% to 97.85 amid relative strength in the euro (+0.6%) and yen (+0.9%).
Looking at individual stocks, Micron ( MU 79.16, -2.89, -3.5%) coughed up an early 5% gain despite reporting better-than-expected earnings results and guidance, while Five Below ( FIVE 160.20, -11.19, -6.5%), Chewy ( CHWY 42.79, -8.21, -16.1%), and RH ( RH 334.28, -51.41, -13.3%) each provided disappointing guidance.
Lululemon athletica ( LULU 376.92, +32.95, +9.6%), on the other hand, stood out with a 10% gain on positive earnings results, upbeat guidance, and a $1 billion share repurchase announcement.
Reviewing Wednesday’s economic data:
- The third estimate of Q4 GDP showed a downward revision to 6.9% (Briefing.com consensus 7.1%) from the second estimate of 7.0%. The GDP Price Deflator was left unrevised at 7.1% (Briefing.com consensus 7.1%).
- The key takeaway from the report is that the downward revision was owed to lower personal consumption expenditures and exports while private inventory investment was revised higher.
- The ADP Employment Change report estimated that 455,000 jobs were added to private sector payrolls in March (Briefing.com consensus 440,000). The increase in February was upwardly revised to 486,000 from 475,000.
- The weekly MBA Mortgage Applications Index fell 6.8% following an 8.1% decline in the prior week.
Looking ahead, investors will receive Personal Income and Spending for February, PCE Prices for February, weekly Initial and Continuing Claims, and the Chicago PMI for March on Thursday.
- S&P 500 -3.4% YTD
- Dow Jones Industrial Average -3.1% YTD
- Russell 2000 -6.9% YTD
- Nasdaq Composite -7.7% YTD
Overseas:
- Europe: DAX -1.5%, FTSE +0.6%, CAC -0.7%
- Asia: Nikkei -0.8%, Hang Seng +1.4%, Shanghai +2.0%
Commodities:
- Crude Oil +3.34 @ 107.67
- Nat Gas +0.23 @ 5.58
- Gold +22.50 @ 1936.90
- Silver +0.20 @ 24.99
- Copper +0.00 @ 4.74