Benchmarks ended lower on Monday dented by escalating tension
over Crimea and another drop in the bio-tech stocks for the
second straight day. Investors' confidence further dipped over
growing concerns about China's economy. The day's encouraging
domestic economic numbers failed to avoid the losses.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) dropped 0.2% to close
Monday's trading session at 16,276.69. The Standard & Poor
(S&P 500) fell 0.5% to finish at 1,857.44. The tech-laden
Nasdaq Composite Index plunged 1.2% to 4,226.39. The fear-gauge
CBOE Volatility Index (VIX) moved up 0.6% to settle at 15.09.
Total volume on the New York Stock Exchange was 3.4 billion
shares. Advancing stocks were outnumbered by declining stocks on
the NYSE. For 36% stocks that advanced, 61% declined.
Markets slipped on Monday as growing political tension between
Russia and the West over Crimea kept the mood jittery. On Monday,
Ukraine ordered its troops to evacuate Crimea. Last week, Russian
forces had already seized two Ukrainian naval bases; including
the Crimean port of Sevastopol after Russian President Vladimir
Putin signed the treaty for annexing Crimea.
The U.S President Barack Obama opposed this move and began talks
with European allies on ways to counter what is seen as the
biggest East-West conflict since the Cold War. Last week, he had
declared sanctions on a Russian bank and prominent Russian
officials, including close allies of Putin. Also, he approved
possible future sanctions on Russian financial services, defense
and energy sectors.
Shares of bio-tech companies dropped for the second trading
session in a row. On Friday, bio-tech companies were affected
after Democrats on the U.S. House Energy & Commerce Committee
asked Gilead Sciences Inc. (NASDAQ:
) to justify the $84,000 price tag on its new hepatitis C drug
The Health Care Select Sector SPDR (XLV) led the decline among
the S&P 500 sectors as the sector fell 1.1%. Key stocks from
the sector such as Johnson & Johnson (NYSE:
), Pfizer Inc. (NYSE:
), Merck & Co. Inc. (NYSE:
), Amgen Inc. (NASDAQ:
) and Bristol-Myers Squibb Company (NYSE:
) fell 0.8%, 2.1%, 1.6%, 1.3% and 1.9%, respectively.
Dismal data from China also weighed heavily on the benchmarks.
The initial or "flash" Markit/HSBC Purchasing Managers' Index
fell to an eight month low of 48.1 in March from 48.5 in
February, indicating a possible decline in China's manufacturing
activity for the third straight month.
Earlier reports of larger-than-expected decline in Chinese
exports had raised concerns of a slowdown in the world's
second-largest economy. The anxiety further intensified after the
Chinese government reported lower-than-expected yearly increases
in industrial production, fixed asset investment and retail sales
of 8.6%, 17.9% and 11.8%, short of analysts' expectations of a
rise by 9.5%, 19.4% and 13.5%, respectively.
On the economic front, the preliminary Markit US flash purchasing
managers index slipped to 55.5 in March from 57.1 in February.
However, manufacturers remain assured that the reading is above
the key level of 50, indicating growth. The warm weather was
cited to be the reason for the robust Markit readings for the
last two months.
Nine out of ten sectors of the S&P 500 ended in the red. The
Consumer Discretionary sector followed the Health Care sector.
The Consumer Discret Select Sector SPDR (XLY) decreased 1%. Major
stocks from the sector such as Amazon.com Inc. (NASDAQ:
), The Walt Disney Company (NYSE:
), The Home Depot, Inc. (NYSE:
), priceline.com Incorporated (NASDAQ:
) and Twenty-First Century Fox, Inc. (NASDAQ:
) slipped 2.4%, 1.1%, 0.9%, 3.2% and 1.4%, respectively.