Benchmarks snapped a four-day winning streak and ended lower on Thursday as investors adopted a wait and watch approach ahead of Friday's nonfarm payroll data. Economic data came in mixed, hardly impacting the cautious stance of investors. These reports included better service sector data, higher weekly jobless claims and an increase in the U.S. trade deficit. Declines in bio-tech and momentum stocks had a negative impact on the Nasdaq Composite Index.
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The Dow Jones Industrial Average (DJI) dropped a meager 0.5 points to close Thursday's trading session at 16,572.55. The Standard & Poor 500 (S&P 500) fell 0.1% to finish at 1,888.77. The tech-laden Nasdaq Composite Index finished at 4,237.74, down 0.9%. The fear-gauge CBOE Volatility Index (VIX) went up 2.1% to settle at 13.37. Total volume for the day was roughly 6.0 billion shares, lower than this month's average of 6.4 billion. Advancing stocks were outnumbered by declining stocks on the NYSE. For 39% stocks that advanced, 57% declined.
Markets slipped on Thursday as investors were cautious ahead of Friday's monthly non-farm payroll report. The total non-farm payroll accounts for approximately 80% of the workers who produce the entire gross domestic product of the United States. It is used by government policy makers and economists to determine the current state of the economy and predict future levels of economic activity.
The Nasdaq Composite Index ended in the red due to a drop in bio-tech stocks. Shares of bio-tech companies such as Biogen Idec Inc. (NASDAQ: BIIB ), Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX ) and Amgen Inc. (NASDAQ: AMGN ) plunged 2.5%, 4.4% and 1.5%, respectively. Overall, the Health Care Select Sector SPDR (XLV) fell 0.2%.
Momentum stocks also dragged the Nasdaq down. Shares of momentum stocks such as electric car maker Tesla Motors, Inc. (NASDAQ: TSLA ), online movie rental company Netflix, Inc. (NASDAQ: NFLX ) and social media giant Facebook, Inc. (NASDAQ: FB ) plummeted 2.1%, 2.3% and 5.2%, respectively. Momentum stocks are those which are generally favored by the investors.
On the economic front, according to data from the Institute for Supply Management, its Non-Manufacturing Index for March increased 1.5 percentage points to 53.1% from February's reading of 51.6%. This was the highest monthly change since 1998. However, this rise was less than the consensus expectation of an increase to 53.4%. The ISM Employment gauge also increased to 53.6% in March from 47.5% in February.
Separately, the U.S Department of Labor reported that seasonally adjusted initial claims increased 16,000 to 326,000 in the week ending March 29. This rise in application for unemployment benefits reached the highest level in a month. The rise was also more than the consensus expectations of initial claims increasing to 318,000.
Additionally, the U.S. trade deficit rose to a five-month high in February. The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, reported that goods and services deficit had increased to $42.3 billion in February from $39.3 billion in January. Exports in February decreased $2.0 billion to $190.4 billion, while imports increased $1.0 billion to $232.7 billion.
Five out of 10 sectors of the S&P 500 ended in the green. The Energy Select Sector SPDR (XLE) led the advance as the sector rose 0.7%. Key stocks from the sector such as Schlumberger Limited (NYSE: SLB ), Occidental Petroleum Corporation (NYSE: OXY ), EOG Resources, Inc. (NYSE: EOG ), Anadarko Petroleum Corporation (NYSE: APC ) and Phillips 66 (NYSE: PSX ) increased 0.4%, 0.5%, 1.6%, 14.5% and 1.7%, respectively.
The Technology Select Sector SPDR (XLK) led the decline as the sector fell 0.5%. Major stocks from the sector such as Apple Inc. (NASDAQ: AAPL ), Microsoft Corporation (NASDAQ: MSFT ), International Business Machines Corporation (NYSE: IBM ) and Oracle Corporation (NYSE: ORCL ) fell 0.7%, 0.8%, 0.4% and 1.9%, respectively.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.