Benchmarks closed mixed on Thursday with both the S&P 500 and Nasdaq ending in negative territory, even as the Dow finished in the green. Special counsel Robert Mueller has reportedly subpoenaed Trump Organization for Trump's business-related documents. This factor along with trade war fears weighed on investor sentiment.
The S&P 500 fell for fourth straight-day, its longest such stretch of decline since last December. However, the Dow managed to post a one-day rise of around 116 points, after investors indulged in bargain hunting, seeking out blue-chip stocks on the dip.
How the Benchmarks Fared?
The Dow Jones Industrial Average (DJI) increased 0.5%, or 115.95 points, to close at 24,873.66. However, the S&P 500 fell 0.1% to close at 2,747.33. The tech-laden Nasdaq Composite Index closed at 7,481.74, losing 0.2%. The fear-gauge CBOE Volatility Index (VIX) decreased 3.3% to close at 16.67. A total of 6.65 billion shares were traded on Thursday, lower than the last 20-session average of 7.08 billion shares. Decliners outnumbered advancers on the NYSE by a 1.71-to-1 ratio. On Nasdaq, a 1.31-to-1 ratio favored declining issues.
Trade War Fears, Mueller's Subpoena Drag Indexes
Late on Tuesday, Trump reportedly said that the U.S. is looking to impose "tariffs on up to $60 billion of Chinese imports." Further on Thursday, he stated that the U.S. is thinking of imposing tariffs of more than $30 billion on Chinese imports"as part of a package of anti-China measures," per a Wall Street Journal report. Trump's protectionist stance raised concerns over a possible retaliation by other countries including China.
Additionally, The New York Times reported that special counsel Robert Mueller has subpoenaed the Trump Organization for documents relating to Trump's businesses. This subpoena was issued in connection with an inquiry into Russian involvement in the 2016 U.S. Presidential election. Following this development, two key indexes, S&P 500 and Nasdaq posted losses for the fourth consecutive session.
The Materials Select Sector SPDR (XLB) decreased 1.3%, becoming the worst performing sector among the S&P 500. Some of its key holdings, Monsanto Company MON , CF Industries Holdings, Inc. CF and Newmont Mining Corporation NEM fell 4.8%, 3.3% and 2.3%, respectively.
Investors' Bargain Hunting Boost the Dow
Recent uncertainty resulted in decline in stock prices, which encouraged investors to buy on the dip and focus on blue-chip stocks. Following this development, the Dow was the only key index that managed to end in the green. Dow component UnitedHealth Group Incorporated UNH increased 1.8% and was the biggest contributor to the blue-chip index's gains on the day. UnitedHealth Group has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
In economic news, the U.S Department of Labor reported that seasonally adjusted initial claims decreased 4,000 to 226,000 in the week ending March 10, reaching its lowest level in 50 years. Initial claims were also less than the consensus estimate of 227,000. Record fall in jobless claims indicated a tighter labor market.
According to the Federal Reserve Bank of Philadelphia, manufacturing activity in some of the eastern U.S. states including Pennsylvania, New Jersey and Delaware continued to expand in March. The Philadelphia Fed manufacturing index slipped to 22.3 in March from 25.8 in February. But, the gauge remained well above zero, which indicates improving conditions.
Manufacturing activity has also been growing robustly in New York State this month, the Federal Reserve Bank of New York said in its latest news release. The Empire State manufacturing index climbed to a reading of 22.5 in March from 13.1 in February.
Encouraging manufacturing data from major states and fall in initial claims had a positive impact on industrials stocks. The Industrial Select Sector SPDR (XLI) advanced 0.3%, becoming the biggest gainer among the S&P 500 sectors. Dow components, Caterpillar Inc. CAT , 3M Company MMM and Union Pacific Corporation UNP rose 1.3%, 0.7% and 1.1%, respectively.
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