U.S. Stocks Swing Lower

Date : 13/03/2018 @ 17:12
Source : Dow Jones News

U.S. Stocks Swing Lower

By David Hodari and Allison Prang 
   -- U.S. inflation data in focus 
 
   -- Indexes turn lower midday 
 
   -- Trading calm in Europe, Asia-Pacific 

Stocks turned lower midday Tuesday as technology and financial shares declined.

The Dow Jones Industrial Average fell 97 points, or 0.4%, to 25082. The S&P 500 declined 0.4%, and the tech-heavy Nasdaq Composite dropped 0.9%.

Tech stocks in the S&P 500 fell by 1%, led by a 4.8% drop in shares of Qualcomm after President Trump on Monday blocked Broadcom's $117 billion hostile takeover bid on national security grounds. Financial stocks fell 0.7%, alongside a decline in bond yields.

Jonathan Corpina, senior managing partner for Meridian Equity Partners, said the market has depended on news as a propeller.

"When you get a little bit of a drought, it seems like we get that pullback," he said, adding that he thinks investors are "reluctant" to decide which way to go.

The indexes had opened higher and the Dow climbed as much as 197 points earlier in the session after the latest round of inflation data showed consumer prices increased more modestly in February than in the previous month.

The consumer-price index, which measures what Americans pay for everything from shampoo to hotel stays, rose 0.2% in February after climbing a seasonally adjusted 0.5% in January, the Labor Department said. Economists surveyed by The Wall Street Journal expected a 0.2% increase.

Erik Davidson, chief investment officer for Wells Fargo Private Bank, said the market doesn't have "to fear an extremely aggressive Fed." He expects the Federal Reserve to stay on track for three interest-rate increases this year.

"Because of this inflation data this morning...the Fed is not necessarily going to need to act more quickly," he said.

President Donald Trump also said Tuesday he would nominate CIA director Mike Pompeo as secretary of state to replace Rex Tillerson. The inflation data was still the bigger news Tuesday, observers said, as Wall Street has learned to deal with turnover in the administration.

"This is now what is expected to be normal," said Matt Miskin, market strategist at John Hancock Investments.

A lack of inflationary jitters during 2017 allowed U.S. stock indexes to leap to multiple records early in 2018, while investors kept long-term bond yields subdued.

Since the start of February, however, rising inflation in both the U.S. and Europe has prompted investors to second-guess central-bank guidance, fueling speculation about tighter monetary policy.

The inflation data was released against a fraught trading backdrop, with the Trump administration's announcement of tariffs on steel and aluminum imports having provoked rebukes from China and the European Union in recent days. How those trading partners now respond may have broader implications for global economic growth, analysts say.

"Trade and GDP growth are intimately linked. You've seen a big pickup in trade in the past six months, but now, that growth rate is slowing," said Edmund Shing, global head of equity derivative strategy at BNP Paribas. "The chances of a global recession in the next year or two are already rising and if you add to that a slowdown in the rate of trade -- not just a slowdown in trade growth -- it could have repercussions for global economies."

The yield on U.S. 10-year Treasurys edged down to 2.852%, according to Tradeweb, from 2.870% on Monday.

Elsewhere, the Stoxx Europe 600 slipped 1%, after Asia-Pacific indexes shrugged off early pressure.

In Asia, Japanese stocks closed up 0.7%, erasing earlier losses. The Shanghai Composite fell 0.5% on news that China plans to merge its banking and insurance regulators.

Kenan Machado contributed to this article.

Write to David Hodari at David.Hodari@dowjones.com and Allison Prang at allison.prang@wsj.com

 

(END) Dow Jones Newswires

March 13, 2018 12:57 ET (16:57 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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