U.S. stocks closed mostly lower on Thursday following the release of disappointing economic data. Moreover, conflicting news on government shutdown also dented investors’ confidence. The Dow and S&P 500 ended in the red while the Nasdaq Composite finished in the green.
The Dow Jones Industrial Average (DJI) closed at 25,439.39, declining 0.4% or 103.88 points. The S&P 500 Index (INX) decreased 0.3% to close at 2,745.73. However, the Nasdaq Composite Index (IXIC) closed at 7,426.95, gaining 0.1%. A total of 7.18 billion shares were traded on Thursday, lower than the last 20-session average of 7.43 billion shares. Advancers outnumbered decliners on the NYSE by 1.21-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.02-to-1 ratio. The CBOE VIX increased 3.6% to close at 16.22.
How Did the Benchmarks Perform?
The Dow ended in negative territory after two straight winning days. Notably, 18 stocks of the 30-stocks blue-chip index finished in the red while twelve ended in the green. The Coca-Cola Co. KO suffered the most with a decline of 8.4% after the company provideda soft outlook for 2019 due to concerns regarding increased impacts of foreign currency ( Read More ). This was the company’s worst single day decline since 2008.The Coca-Cola carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
The S&P 500 closed in negative territory reversing its four-day winning streak. The Financials Select Sector SPDR (XLF) and Consumer Staples Sector SPDR (XLP) were major losers declining 1.2% and 1.1%. Notably, six out of 11 sectors of the benchmark index closed in the red while five ended in green. The tech-heavy Nasdaq Composite finished in the green for five consecutive days, due to good performance by large-cap tech stocks.
Disappointing Economic Data
The Department of Commerce reported that retail sales in December 2018 declined 1.2%, largest monthly drop since September 2009. The figure was in sharp contrast to the consensus estimate of a growth of 0.1%. Data for November was also revised downward from a gain of 0.2% to 0.1%. Year over year, retail sales in December grew 2.3%.
The core retail sales (excluding automobiles, gasoline, building materials and food services) decreased 1.7% in December. This is a key metric as itcorresponds most closely with the consumer spending component of gross domestic product. Notably, consumer spending constitutes more than 70% of the U.S. GDP.
Decline in December retail sales was broad-based in nature. Online and mail-order decreased 3.9%, marking biggest drop since November 2008. Sales at service stations declined 5.1%, signifying the biggest drop since February 2016. Sales at hobby, musical instrument and book stores plummeted 4.9%, reflecting its biggest drop since September 2008. Sales at restaurants and bars tanked 0.7%. Moreover, clothing and furniture stores sales also declined.
The Department of Labor reported that initial jobless claims rose by 4,000 to a seasonally adjusted 239,000 for the week ended Feb 9, surpassing the consensus estimate of 224,000. The number of people already collecting unemployment benefits, popularly known as continuing claims, increased by 37,000 to 1.77 million. However, the four-week average of new jobless claims increased by 6,750 last week ended at Feb 9, to 231,750, marking the highest level since the January 2018.
The governmen t report ed that the U.S. producer price index declined 0.1% in January compared with the consensus estimate of a gain of 0.1%.
Conflicting News on Government Shutdown
On Feb 14, Senate Majority Leader Mitch McConnell said that President Donald Trump will sign a spending bill to keep the government open while declaring a national emergency at the United States – Mexico border. Notably, on Feb 12, Republican as well Democrat Congressional leaders reached a joint agreement to allow funding for barriers along the U.S. – Mexico border. This has prevented another government shutdown.
The Republicans agreed to far less an amount than initially demanded in a bid to avoid a shutdown. A sum of $1.4 billion was approved by Congress for building 55 miles of new fencing instead of a concrete wall.President Trump had demanded $5.7 billion for the construction of a 215-mile-long concrete fence across the border.
Zacks’ Top 10 Stocks for 2019
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This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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