Markets closed in the red on Monday after reports surfaced that there might be a formal trade deal between the United States and China by the end of this month. Investors initially welcomed such developments only to become cautious later in the session. Further, Wall Street's two-month rally has led to stocks becoming increasingly expensive. This also dampened market sentiment.
The Dow Jones Industrial Average (DJI) decreased 0.8%, to close at 25,819.65. The S&P 500 decreased 0.4% to close at 2,792.62. The tech-laden Nasdaq Composite Index closed at 7,577.57, losing 0.2%. The fear-gauge CBOE Volatility Index (VIX) increased 6.7% to close at 14.48. Decliners outnumbered advancers on the NYSE by a 2.48-to-1 ratio. On Nasdaq, a 2.37-to-1 ratio favored declining issues.
How Did the Benchmarks Perform?
The Dow lost 206.7 points to end the session in negative territory. This marked the Dow's lowest close since Feb 14. The 30-stock index wobbled 500 points throughout the session, rising by as much as 129 points during its session high and dwindling by about 415 at its session low. Losses for the Dow were buoyed by a 1.8% dip in the shares of Boeing BA .
The S&P 500 declined 11.1 points to also end in the red. Of the 11 major sectors of the S&P 500, six ended in the negative territory, with healthcare and financials leading the decliners. The Financial Select Sector SPDR ETF (XLF) and the Health Care Select Sector SPDR ETF (XLV) lost 0.6% and 1.4%, respectively.
Meanwhile, the Nasdaq lost 17.8 points to also end in negative territory. Earlier in the session, the tech-laden index had gained 0.6%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
A Formal U.S.- China Trade Deal Possible by Month End
Per a Bloomberg Report published on Feb 28, America and China are on the verge of closing in on a trade deal. The report stated that U.S. officials were preparing for a summit between President Donald Trump and China's Xi Jinping in which the two leaders are expected to sign a 150-page document. The agreement could be reached as early as in the next two weeks.
On Mar 4, reports from surfaced that both the countries were in the final stages of closing the trade deal. China is believed to have agreed to reduce tariffs on farm, chemical, auto and other products from the United States. In return, America was considering nixing most of its sanctions on Chinese products.
Moreover, early last week, U.S. trade representative Robert Lighthizer had stated that additional tariffs on $200 billion worth of Chinese goods, set to be increased from 10% to 25% from 12.01 A.M. Mar 1, would not be imposed. These developments boosted the market sentiments.
On the economic data front, the U.S. Department of Commerce reported that U.S. construction spending for the month of December declined 0.6%. The consensus estimate for the period was an increase of 0.2%.
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