Benchmarks ended in the red on Tuesday, dragged down by losses in technology, biotechnology and small-cap stocks. U.S. trade deficit touched its highest level in almost six and a half years, adding to the bearish sentiment. Meanwhile, investors remained concerned over fresh troubles in Greece and kept an eye on upcoming nonfarm payrolls data to gauge the timing of a rate hike. The S&P 500 registered its biggest one-day percentage decline in six weeks on Tuesday.
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The Dow Jones Industrial Average (DJI) declined 0.8% to close at 17,928.20. The Standard & Poor's 500 (S&P 500) decreased 1.2% to 2,089.46. The tech-laden Nasdaq Composite Index closed at 4,939.33; declining almost 1.6%. The fear-gauge CBOE Volatility Index (VIX) climbed 11.4% to settle at 14.31. A total of about 7.3 billion shares were traded on Tuesday, higher than the last five trading days' average of 7 billion. Decliners outpaced advancing stocks on the NYSE. For 78% stocks that declined, 20% advanced.
Benchmarks fell sharply on Tuesday due to broad based declines in technology and biotechnology stocks. The Technology Select Sector SPDR (XLK) declined almost 1.6% and was the second biggest loser among the S&P 500 sectors. Shares of Apple Inc. ( AAPL ) dropped 2.3%, which eventually had a negative impact on the Nasdaq. Other major technology stocks including Microsoft Corporation ( MSFT ), AT&T Inc. ( T ), Google Inc ( GOOGL ) and International Business Machines Corporation ( IBM ) decreased 1.3%, 2.4%, 1.8% and 0.5%, respectively.
Biotech stocks such as Celgene Corporation ( CELG ), Amgen Inc. ( AMGN ), Gilead Sciences Inc. ( GILD ), Regeneron Pharmaceuticals, Inc. ( REGN ) and Celladon Corporation ( CLDN ) also decreased 2.2%, 1.7%, 2.5% 1.8% and 3.8%, respectively. Overall, the iShares Nasdaq Biotechnology (IBB) fell 2.1%, while the broader Health Care Select Sector SPDR (XLV) declined 1.3%.
Yesterday's losses were broad based with all 10 sectors of the S&P 500 ending in the red and 28 out of 30 Dow components finishing in negative territory. Additionally, the Russell 2000 index of small-cap stocks declined 1.4% to 1,215.42. Decline in small-cap stocks also weighed on broader markets.
Meanwhile, U.S. trade deficit in March rose to its highest level in nearly six and a half years, affecting investor sentiment. The U.S. Census Bureau reported that trade deficit increased in March to $51.4 billion from $35.9 billion in February, more than the consensus estimate of deficit of $41.4 billion. Imports also increased $17.1 billion from February to $239.2 billion in March. Meanwhile, exports increased only $1.6 billion in March from the February level of $187.8 billion. Lingering delays in shipments due to labor dispute at West Coast ports was cited to be the reason behind this wide trade deficit.
On the other hand, data on economic activity in the non-manufacturing sector in April turned out to be better-than-expected. According to the Institute for Supply Management Non-Manufacturing Business Survey Committee, the NMI edged 1.3 percentage points higher than March's reading to 57.8% in April. The consensus estimate had pegged the same at 56.1%. The Non-Manufacturing Business Activity Index also increased 4.1 percentage points to 61.6%.
Investors were jittery following a standoff between Greece and its creditors. European shares fell after International Monetary Fund decided to trim its aid to Greece unless the country accepts its debt obligations. Investors also awaited April's jobs report to get further indications about the timing of the rate hike.
Coming to domestic earnings results, The Estée Lauder Companies Inc. ( EL ) reported third quarter earnings per share of 72 cents that surpassed the Zacks Consensus Estimate of 51 cents. The Walt Disney Company's ( DIS ) second quarter earnings per share of $1.23 also beat the Zacks Consensus Estimate of $1.11. Kellogg Company ( K ) too reported first quarter earnings per share of 98 cents, beating the Zacks Consensus Estimate of 92 cents. While, shares of Estée Lauder went up 4%, Walt Disney and Kellogg's shares declined 0.2% and 1.5%, respectively.
Including these reports, about 393 S&P 500 members have reported first quarter earnings results so far. Among the 393 members, first quarter earnings are up 3.8% on 3.9% lower revenues, with 66.7% beating earnings per share estimates and 43% coming ahead of top-line expectations.