Wall Street indexes ended with declines on Wednesday as investors are waiting for signals that a US-China trade deal could be reached in the near future.
The blue-chip index Dow Jones Industrial Average wiped out 133.17 points of its value. The broader benchmark S&P 500 declined by 0.65%, driven by the downturn in the energy and health sectors. The technology index Nasdaq Composite moved into negative territory by 0.93%, with Amazon shares falling by 1.2%.
The energy sector wiped out more than 1.5% of its stock, as crude oil prices are under pressure due to supply growth. The Energy Information Administration reported that crude oil inventories rose 7.1 million barrels last week. This led to a decrease in oil prices by more than 1%.
Small got smacked with much heavier losses. The Russell 2000 fell 2%. At 1536, the popular small-cap gauge still holds a 13.9% year-to-date gain. The S&P SmallCap 600 also backtracked 2%.
According to analysts, President Donald Trump urges the US and China to reach an agreement in the hope that this will raise stock prices before the 2020 elections.
Earlier this week was released that the US and China are in a “final stage” of trade talks, with the two countries planning a summit at the end of the month. The US Secretary of State Mike Pompeo also said on Monday that he believes Washington and Beijing are “on the verge” to reach an agreement.
The stock markets started the year well, with the S&P 500 rising by over 11% since the beginning of 2019 to the end of the session on Tuesday.
However, the fear is that the conclusion of an agreement is already registered by the markets and this limits the profits from possible positive news about the trade conflict.
Recently, the S&P 500 had a problem with achieving a significant breakthrough over the key level of 2,800 points, which is closely monitored by investors. The broad benchmark managed to close above this level in the Friday session, but this week it fell again below.
Meanwhile, it has become clear that the number of new jobs in the US private sector has increased by 183,000 in February, but lower than the analysts’ expectations for 185,000 new jobs.
The US trade deficit rose to a peak of 59.8 billion USD, despite the administration’s efforts to reduce it.
Corporate stocks performance
Healthcare companies Nektar Therapeutics and WellCare Health Plans registered a decline in the price of their stock by more than 4%.
Horizon Pharma gapped down and dropped more than 6%. The volume grew by 64% above its 50-day average. The specialist in arthritis and pain treatments still holds a 12% profit after a second breakout past a 22.76 buy point in a 12-week cup with handle.
General Electric shares fell more than 7.5% after J.P. Morgan analyst Stephen Tusa said in a note the company’s stock is overvalued given the hurdles it faces over the next two years. Tusa kept his price target at 6 USD per share, noting that “looks generous” at this time.
The best performers of the session on the Dow Jones Industrial Average were DowDuPont (+1.47%), Walt Disney Company (+0.75%) and Cisco Systems Inc (+0.72%). On the opposite side were Walgreens Boots Alliance (-3.63%), Pfizer (-2.4%) and Caterpillar (-1.68%).
The top performers on the S&P 500 were LyondellBasell Industries NV (+6.11%), Dollar Tree Inc (+5.11%) and Aon PLC (+4.29%). The worst performers within the index were General Electric Company (-7.89%), Signet Jewelers Ltd (-6.91%) and Willis Towers Watson PLC (-6.13%).
Corporate earnings reports
BlackRock Capital Investment Corporation reported Q4 EPS of 0.17 USD, in-line with the analyst estimate. Net leverage of 0.36x was down reflecting a net reduction in investments. Total liquidity for portfolio company investments, including cash, was approximately 252 million USD, subject to leverage and borrowing base restrictions.
The discount store company Dollar Tree reports a gross profit decrease of 30.8% of sales versus 33.0% a year ago. Higher markdowns, domestic freight costs, shrink, distribution costs and occupancy costs dragged on margins during the quarter. The company says a goodwill impairment test performed in Q4 showed that the fair value of the Family Dollar business was lower than the carrying value resulting in a 2.73 billion USD non-cash pre-tax and after-tax goodwill impairment charge.