Losses were led by technology and financial sectors
The U.S. stock market extended losses for the second day and finished lower on Thursday, 27 March 2014 amid concerns that improving economic indicators might force the Fed to start raising rates sooner than anticipated. The fourth-quarter GDP figures were revised up, while weekly jobless claims fell by more than expected to the lowest level in four months.
The Dow Jones Industrial Average closed 4.76 points lower at 16,264.23. The Nasdaq Composite finished the day 22.35 points, or 0.5%, lower at 4,151.23. The S&P 500 ended the day 3.52 points, or 0.2%, lower at 1,849.04.
Losses were led by technology and financial sector stocks.
The early selling in biotechnology pressured the health care sector but the influential group was able to erase the bulk of its early loss thanks in part to the 3.9% gain in the shares of Baxter after the company announced plans to split into two entities.
The ICE dollar index, which measures the U.S. currency against a basket of six major rivals, edged higher on Thursday.
The Russia-Ukraine tensions have not escalated significantly recently, but the situation remains a concern to the world market place. While the U.S. is leading a worldwide effort to isolate Russia after its annexation of Crimea, reports Thursday said Russian economic growth is set to slow to the weakest rate in years. Meantime, the IMF has agreed to loan Ukraine up to $18 billion to help out that nation's struggling economy, after the Russian incursion.
The markets paid little attention to news late Wednesday that some U.S. and world banks, including Citi, failed a government stress test due to inadequate capital plans. Those banks will have to resubmit new capital plans to the Federal Reserve.
U.S. economic data out Thursday included the weekly jobless claims report, the third-quarter GDP estimate, the Kansas City Fed manufacturing survey, and pending home sales.
In details, Fourth quarter GDP was revised up to 2.6% in the third estimate from 2.4% in the second estimate. That matched the consensus estimate, but was down from a 4.1% gain in Q3 2013. Real final sales increased 2.7% in the fourth quarter. That was up from a 2.5% gain in Q3 2013 and above the previously reported 2.3% gain. It was also the strongest increase in real final sales since increasing 3.4% in Q2 2012. Looking at real final sales over the last four quarters (0.2%, 2.1%, 2.5%, and 2.7%), there is a definite upward moving trend. The year-over-year averages, however, put it below the 2.0% and 2.6% gains from 2011 and 2012.
The initial claims level fell to 311,000 for the week ending 22 March from an upwardly revised 321,000 (from 320,000) for the week ending 15 March. The consensus expected the initial claims level to increase to 330,000. Pending home sales for February fell 0.8%, which was worse than the 0.2% decrease forecast by the consensus. Today's reading followed last month's revised decrease of 0.2% (from +0.1%).
Among stocks under focus, Citigroup shares fell 5.4% after the bank failed to measure up to the Federal Reserve's stress-test requirements.
Bullion metals ended moderately lower on Thursday, 27 March 2014. Gold futures lost their hold on the $1,300-an-ounce mark on Thursday to settle at their lowest level in more than six weeks as the dollar edged higher in the wake of better-than-expected economic data, prompting the metal to lose some of its investment appeal.
Gold for April delivery fell $8.70, or 0.7%, to settle at $1,294.70 an ounce on the Comex division of the New York Mercantile Exchange. May silver also declined by 7 cents, or 0.4%, to $19.71 an ounce.
Crude oil prices rose further above the $100-a-barrel mark on Thursday, 27 March 2014 at Nymex settling at their highest close in about three weeks, with analysts attributing the gains to growing global supply concerns as well as a continued drop in crude inventories at a key U.S. storage hub. A fall in U.S. jobless claims and a rise in the nation's economic growth also buoyed prospects for oil demand. Natural gas, meanwhile, saw prices close their highest level in more than two weeks as U.S. supplies fell more than expected.
Crude oil for May delivery added $1.02, or 1%, to settle at $101.28 a barrel on the New York Mercantile Exchange.
Indian ADRs ended mixed on Thursday. In the IT space, Infosys was unchanged at 53.60 and Wipro shed 1% at $12.92 In the banking space, ICICI Bank gained 0.62% at $43.96 and HDFC Bank added 0.8% at $40.41. In the other sectors, Tata Motors was down 1.41% at $34.21 and Dr Reddy's Laboratories slipped 1.08% at $43.12.
Trading volume was a bit above average as 778 million shares changed hands at the NYSE.
Tomorrow, February Personal Income (consensus +0.2%), Personal Spending (consensus +0.3%), and Core PCE Prices (consensus +0.1%) will be released at 8:30 ET while the final reading of the March Michigan Sentiment survey (consensus 80.0) will cross the wires at 9:55 ET.
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