S&P 500, Nasdaq fall, yields rise after hours | March 1, 2023

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U.S. stocks finished mostly lower Wednesday to start March as key manufacturing data offered mixed results and two Federal Reserve officials suggested a more aggressive rate-hiking campaign in the coming months.

The S&P 500 (^GSPC) declined by 0.5%, while the Dow Jones Industrial Average (^DJI) was flat. Contracts on the technology-heavy Nasdaq Composite (^IXIC) fell by 0.6%.

The yield on the benchmark 10-year U.S. Treasury note moved upward and briefly touched 4% Wednesday. Crude oil traded higher, with U.S. benchmark WTI up at $77.73 a barrel.

On the economic data side, U.S. manufacturing firms signaled a grim outlook for the sector, according to the latest PMI data from S&P Global. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index was revised lower to 47.3 in February, up from 46.9 in January. The reading indicates "a solid deterioration in the health of the goods-producing sector, despite the pace of decline softening to the slowest for three months."

Separately, economic activity in the manufacturing sector diminished in February for the fourth consecutive month following a 28-month period of growth, according to the Institute for Supply Management report on business. The data offered a mixed bag. Employment in manufacturing decreased to 49.10 in February from 50.60 in January. New orders rose to 47.0 compared to January's figure of 42.5. Prices paid jumped to 51.3 from January's reading of 44.5.

Stocks fell Tuesday, rounding out the last day of a volatile month of February on Wall Street. According to JP Morgan’s trading desk, February’s month-end rebalance drove some weakness in equities and strength in bonds Tuesday afternoon.

With February in the rearview, the S&P 500 remains up more than 3% this year, according to data from Bespoke Investment Group. Mega-caps have been a massive driver of the index moves. That said, 20 of the largest stocks in the S&P 500 have accounted for most of the index’s gains.

Now, as the calendar turns, March historically sees the S&P 500’s gains in the second half of the month, Bespoke Investment Group noted.

The path of the Federal Reserve's rate hikes remains in focus for investors. Two Federal Reserve officials spoke on Wednesday leaned in the move that aggressive interest rate hikes are the path forward to ease inflation.

They followed Chicago Fed President Austan Goolsbee, who said on Tuesday it would be a “danger and a mistake for policy makers to rely too heavily on market reactions” and emphasized the importance to “supplement these traditional data with observations on the ground from the real economy.”

However, Goolsbee, who will be a voter at this year’s policy-setting Federal Open Market Committee meeting, didn’t comment on monetary policy.

Since last year, the Fed has sharply raised rates in an effort to cool inflation. But inflation remains sticky. Policymakers will be releasing new projections after the central bank’s March 21-22 meeting.

On the housing front, mortgage rates continue to move upward, pushing buyers to the sidelines as the spring housing market is underway. Both purchase and refinance applications slumped last week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume of purchase applications hit a 28-year low, down 44% from a year ago.

Here are some of the tickers trending on Yahoo Finance today:

Eli Lilly and Company (LLY): The drugmaker announced Wednesday morning it expects to cap out-of-pocket cost of its insulin at $35 a month. The plan comes as a promise to provide critical relief to some people with diabetes, who at times face higher medical costs.

Kohl's (KSS): Shares of the retail giant declined nearly 2% Wednesday after the company posted a surprise fourth-quarter loss and sales slumped as consumer habits shift away from discretionary spending.

Wendy's (WEN): The fast-food chain announced in its quarterly earnings about its plans to target sales growth through 2025 as it streamlines costs.

Rivian (RIVN): The electric truck manufacturer’s guidance for fiscal 2023 deliveries came in 20% below estimates as the EV maker struggles to scale up its truck, van, and SUV production.

Nio (NIO): Another EV maker gave weak revenue guidance. The Chinese premium EV startup, reported a much worse-than-expected fourth-quarter loss as margins took a hit due to in part to "losses on purchase commitments."

Novavax (NVAX): The vaccine maker warned of its ability to stay in business through next year. This comes as the company has struggled to develop and enter the COVID-19 vaccine market.

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