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Benchmarks closed in the red on Monday, dragged down by weak auto sales data and a dip in manufacturing growth rate. The failure of Trump administration to pass the healthcare bill intensified investor concerns about Trump’s ability to implement pro-growth policies. Both the Dow and the S&P 500 had been in risk of closing below their 50-day moving averages for the first time since U.S. presidential elections, a sign that optimism about implementation of market-friendly policy proposals, is fading. Meanwhile, some U.S. states accused Trump’s administration of illegally suspending energy efficiency standards which had a negative impact on markets.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) declined 13.01 points to close at 20,650.21. The S&P 500 fell 0.2% to close at 2,358.84. The tech-laden Nasdaq Composite Index closed at 5,894.68, declining 0.3%. The fear-gauge CBOE Volatility Index (VIX) gained 0.1% to settle at 12.38. A total of around 6.8 billion shares were traded on Monday, matching the last 20-session average. Decliners outpaced advancing stocks on the NYSE. For 54% stocks that declined, 43% advanced.
Weak Auto Sales Data
In March, the U.S. auto sales figures declined amid increase in inventories of unsold vehicles. As per WardsAuto, seasonally-adjusted annualized rate (SAAR) for light vehicle sales came in at 16.53 million in March, lower than the market expectations. For the first time since August, SAAR had fallen below 17 million. General Motors’ (GM – Free Report) , sales advanced 1.5% but missed expectations of a larger uptick whereas Ford Motor’s (F – Free Report) sales declined by 7.2%. Disappointing sales data hinted that robust boom cycle for car sales may finally be waning. The weak performance of the auto industry put pressure on the broader market.
U.S. Manufacturing Growth Slowed
According to Markit, U.S. manufacturing sector recorded sluggish growth in March, marking the slowest pace of improvement for the sector since November. As per Markit, purchasing managers’ final index fell to 53.3 in March, compared with a reading of 54.2 in February. According to Markit report, the loss in momentum was primarily attributable to softer rates of output. Meanwhile, the ISM Manufacturing Index declined to 57.2 in March from 57.7 in February.
Tax Reform in Focus
Investors are now awaiting a next catalyst in the form of tax reforms and deregulation before making any big bets. Failure to secure adequate votes to pass the Healthcare bill through the House of Representatives raised questions over Trump administration’s ability to implement his other pro-growth agenda including tax reforms.
Moreover, some of the U.S. States opposed Trump administration for illegally blocking energy efficiency standards which negatively impacted investor confidence which eventually had a negative impact on the broader markets, with nine out of eleven sectors in S&P 500 declining. The Consumer Discretionary Select Sector SPDR (XLY) declined 0.4% and emerged as the worst performing sector among the S&P 500. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks that made Headlines
Precision dispensing equipment manufacturer, Nordson Corporation (NDSN – Free Report) recently announced that it has successfully completed the acquisition of Salem, NH-based Advanced Technologies business of Vention Medical. (Read More)
Hewlett Packard Enterprise Company (HPE – Free Report) announced the completion of a spin-off and merger of its Enterprise Services (ES) business with Computer Sciences Corporation, following the approval granted by its majority shareholders last week. (Read More)
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