U.S. stocks traded lower Tuesday afternoon after economic data including a survey of the Chinese manufacturing sector came in above expectations, though concerns remained over the coronavirus epidemic during the final trading session of the first quarter.
What are the major indexes doing?
The Dow Jones Industrial Average
DJIA, -0.45%
fell 148 points, or 0.6%, at 22,194, while the S&P 500 index
SPX, -0.56%
lost 20 points, or 0.7% to 2,608. The Nasdaq Composite
COMP, -0.06%
retreated 24 points, or 0.3% to trade at 7,748.
For the month of March, the Dow is on pace to lose 12.7%, the S&P 500 11.9% and the Nasdaq is set to retreat 9.5%. The Dow is on pace to have its worst first quarter in history, according to Dow Jones Market Data, down 22.3%, while the S&P 500 is on track to lose 19.3% and the Nasdaq 13.6%.
What’s driving the market?
Stocks staged a modest rebound from opening losses late-morning Tuesday as investors digested better-than-expected economic data on U.S. consumer confidence, and regional U.S. and Chinese manufacturing sector at the same time as end-of-quarter portfolio rebalancing could be giving a boost to beaten-down U.S. equities.
“Quarter-end behavior is a factor today,” Willie Delwiche, investment strategist at Baird told MarketWatch. “How much of it is actual rebalancing and how much is about thinking about potential rebalancing effects is hard to know.”
“We’re also starting to get a wave of data that perhaps gives some hint of what’s in store, with consumer confidence, Chicago PMI and Chinese manufacturing data coming in better than expected,” he added.
Early Tuesday, global stocks and U.S. stock-index futures got a lift after data on China’s manufacturing and service sectors showed unexpectedly strong rebounds in March as the country emerged from the lockdown aimed at arresting the spread of COVID-19.
The official Chinese manufacturing purchasing managers index for manufacturing rose to 52.0 in March from a record low of 35.7 in February, the National Bureau of Statistics said Tuesday, topping expectations for a reading of 51.5. The 50 mark separates expansion of activity from contraction.
China’s official service sector purchasing managers index climbed to 52.3 in March from a record-low reading of 29.6 in February.
The PMI readings were “well above expectations and almost too good to be a true for an economy that is still not fully functioning at its pre-crisis optimum level,” said Michael Hewson, chief market analyst at CMC Markets, in a note.
In U.S. data a survey on Chicago area manufacturing came in at 47.8 in March, down from 49.0 in February, but above expectations of between 35.0 and 42.0, according to Econoday. The Conference Board’s consumer confidence index fell to 120 in March from 130.7 in February, also beating expectations of 115.0, according to a MarketWatch survey of economists.
Concerns remain over the spread of COVID-19 in the U.S., Europe in particular, with economic activity under lockdown amid a rising tally of infections and a mounting death toll. Spain reported its highest numbers of deaths since the crisis began Tuesday, while coronavirus-related fatalities in the U.S. surged past 3,100, according to Johns Hopkins University.
Analysts said the stock market’s strong rebound last week and further rally on Monday were encouraging, but the continued volatility made for a treacherous near-term trading backdrop. The debate over whether stocks put in a bear-market bottom on March 23 continues, with analysts noting that past downturns have also seen strong bounces from selloffs, followed by retests of the lows.
“Last week’s double-digit gain for markets was a welcome relief rally, though market bottoms are rarely as clean as this one has been. In 2000/01, there were four rallies of greater than 20% before ultimately reaching a bottom, and in the financial crisis, the S&P 500 had a false breakout of 27% before hitting a bottom,” noted Mark Hackett, chief of investment research at Nationwide, in a note.
In other data, the Case-Shiller home price index for January showed U.S. home prices rising 3.9% annually, before the U.S. economy began feeling the economic impact of the coronavirus.
Which companies are in focus?
• Cruise-line operator Carnival Corp.
CCL, +6.64%
said it would suspend its dividend and the repurchase of its common stock, in an effort to improve liquidity as the spread of COVID-19 has led to the pause of its fleet cruise operations. Shares rose 9% after a 28% drop over the past two sessions and nearly 75% over the past three months.
• Several energy stocks were posting significant gains, after suffering significant declines as oil prices touched their lowest levels since 2002, before rebounding early Tuesday. Exxon Mobil Corp.
XOM, +1.57%
gained 2.7% , while Occidental Petroleum Corp.
OXY, +3.50%
advanced 4.6% and Haliburton Co.
HAL, +7.61%
added 7.5%.
• McCormick & Co. Inc.
MKC, -0.72%
reported fiscal first-quarter earnings that beat expectations, but sales that fell short Tuesday morning. Shares of the spice and condiments manufacturer fell 0.8%.
• Shares of Domino’s Pizza Inc.
DPZ, -6.50%
fell Tuesday after the pizza-delivery company said Monday evening that global sales were on pace to rise 4.4% in the first quarter as stay-at-home orders boost demand for food delivery. The company’s stock has risen 2.4% in March, versus a 11.1% decline for the S&P 500.
How are other markets trading?
Government bond yields moved mostly higher, with the yield on the 10-year U.S. Treasury note
TMUBMUSD10Y, -6.57%
up about 2 basis points to 0.7%.
Oil prices rebounded from 19-year lows, with the price of a barrel of West Texas Intermediate crude oil
CLK20, +1.59%
for May delivery up 2.2%, or 45 cents to about $20.50. In precious metals, gold
GCJ20, -1.81%
fell $10.7, or 0.6% to $1,611 an ounce.
The U.S. dollar
DXY, +0.02%
gained less than 0.1% against a basket of its major trading partners, according to the ICE U.S. Dollar index.
European stocks closed higher, with the Stoxx Europe 600
SXXP, +1.65%
adding 1.7%.
In Asia overnight, stocks traded mixed. The China CSI 300
000300, +0.33%
rose 0.3%, Hong Kong’s Hang Seng index
HSI, +1.85%
rose 1.9% and Japan’s Nikkei 225
NIK, -0.88%
fell 0.9%.
