Worries from China and Fed rattle investors
U.S. stocks finished in the red on Thursday, 13 October 2016 as investors grew jittery following the Federal Reserve's latest meeting minutes as well as weak Chinese economic reports. But the market closed off intraday lows.
The Dow Jones Industrial Average shed 45.26 points, or 0.3%, to close at 18,098.94. The Nasdaq Composite Index lost 25.69 points, or 0.5%, to end at 5,213.33 after sinking to an intraday low of 5,169.76. The S&P 500 declined 6.63 points, or 0.3%, to end at 2,132.55. The large cap index had hit a session low of 2,114 before bouncing back.
Global markets tilted to the downside overnight as a weaker-than-expected Trade Balance Report for September out of China startled investors. The report featured a 10.0% year-over-year decline in exports and a 1.9% year-over-year decline in imports (expected: +0.7%). The negative economic data resuscitated concerns regarding the health of the global economy. It also led to speculation that China may tacitly embrace a competitive devaluation of the yuan to bolster beleaguered export demand.
Minutes from the Fed's September meeting showed support for an interest rate rise soon, yet at the same time implied a go-slow approach. They also confirmed that policy makers have differing views, and a divided Fed is really bad for the market.
Equity indices moved due south through the opening half hour as the heavily-weighted financials, technology and consumer discretionary sectors pressured the benchmark index.
Historically low interest rates have helped drive investors into stocks and other riskier assets, and investors fear that another rate increase could help lead to the end of that trend. But market has also noted that a rate rise would signal confidence in the U.S. economy, and some have highlighted how the stock market has tended to perform well in the earlier part of a tightening process.
Earnings season got off to a disappointing start when Alcoa reported weak results earlier this week.
Today's economic data included weekly initial claims and the Import/Export Price report for September. Initial claims for the week ending October 8 were unchanged at 246,000 (consensus 255,000) from last week's downardly revised reading. Continuing claims for the week ending October 1 declined to 2.046 million from 2.062 million.
Separately, aided by a 1.1% increase in import fuel prices, U.S. import prices rose 0.1% in September following a 0.2% decline in August. Export prices, meanwhile, increased 0.3% after a 0.6% decline in August, helped by a 0.4% rise in non agricultural prices.
The energy sector finished off its low amid an uptick in crude oil. WTI crude settled higher by 0.5% ($50.40/bbl; +$0.25) despite some mixed inventory data. The Department of Energy reported that crude oil inventories rose by 4.9 million barrels (consensus: +0.65 million) while gasoline stockpiles declined by 1.90 million barrels (consensus: 1.49 million).
Today's trading volume fell came in below the recent average of 930 million as 879 million shares changed hands at the NYSE floor.
Tomorrow's economic data will include the 8:30 a.m. ET release of the PPI Report for September (consensus +0.2%) and the Retail Sales Report for September (consensus +0.6%). Separately, Business Inventories for August (consensus +0.1%) and the initial reading of the University of Michigan Consumer Sentiment Index for October (consensus 92.4) will both cross the wires at 10:00 ET.
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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)