U.S. stocks declined on Tuesday, retreating from all-time highs and the psychologically significant 5,000 level for the Nasdaq reached on Monday.
Weaker-than-expected growth in monthly car sales dampened spirits, sending shares of Ford and Fiat Chrysler sharply down. Bone-chilling weather in February was cited as a culprit for weak demand.
On a day in which few major economic gauges were in the spotlight, investors turned their attention to Israeli Prime Minister Benjamin Netanyahu, who used a speech to. Congress to criticize the White House’s attempts to reach a nuclear deal with Iran, saying it was a “bad deal.” The speech reminded investors of potential geopolitical risks abroad, with stocks extending losses but then coming off their lows.
The S&P 500 SPX, -0.45% lost 9.61 points, or 0.5%, to close at 2,107.78, with eight of its main 10 sectors closing lower. A jump in oil prices lifted energy stocks, putting a lid on losses in the index.
The Dow Jones Industrial Average DJIA, -0.47% which dropped as much as 146 points, closed 85.26 points, or 0.5%, lower at 18,203.37. Twenty-four of the 30 blue-chip companies that make up the Dow ended with losses.
After a historic Monday finish, the tech-heavy Nasdaq Composite COMP, -0.56% pulled back from the 5,000 level, settling down 28.2 points, or 0.6%, at 4,979.90. On Monday, the Nasdaq scored its first close above 5,000 since the Internet bust, finishing at 5,008.10 and just 0.8% short of the record close of 5,048.62 set March 10, 2000.
Although the CBOE volatility index, which measures implied volatility on the S&P 500, closed only slightly higher, an 11% jump earlier in the day Tuesday suggested that investors had been bracing for the worst.
J.J. Kinahan, chief strategist at TD Ameritrade, said the jump by the VIX indicates investors are hedging their bets ahead of this week’s major event: the February jobs report on Friday.
“Investors are reassessing risks and buying protection ahead of the jobs report. After disappointing car-sales numbers, there are some concerns that the jobs report may not be as stellar as hoped for,” Kinahan said.
“It is also normal for markets to pull back after reaching record highs, with people booking some profits and selling ahead of Friday employment numbers,” he said.
Commenting on Nasdaq’s 5,000 level, Kelli Keough, senior vice president of trading services at Charles Schwab, noted that those high levels are greeted with a healthy sense of caution rather than euphoria.
“Investors are not celebrating the way they were celebrating in 2000. The near record levels this time are also not associated with super high price-to-earnings ratios. Current Nasdaq PEs are much more reasonable and companies are actually making money, unlike in the heydays of 2000,” Keough said.
Notable individual movers: Mylan NV MYL, +0.42% and Ford Motor Co. F, -2.41% were among the S&P’s biggest decliners, falling 2.4% and 3.3% respectively. Mylan late Monday delivered a quarterly report that roughly matched Wall Street’s forecasts, while Ford reported that its February U.S. vehicle sales fell 1.9% from a year ago.
Shares of McDermott International Inc. MDR, -0.90% soared 28% to $3.33 after the oilfield-engineering company late Monday posted a surprise profit for the fourth quarter.
U.S. sales of cars and light trucks slowed to a 10-month low in February, according to the latest tabulation of results from Autodata. Sales figures came in lower than expected, at an annual rate of 16.23 million.
“Car sales were disappointing because of a bumper month in January. Investors are beginning to worry that consumers are not spending on big item tickets,” Kinahan said.
Other markets: European stock markets slipped, while Asian stocks closed mixed, with China’s Shanghai Composite Index SHCOMP, +0.51% sliding 2.2%.
Oil futures CLJ5, +0.49% climbed by nearly 2% on Tuesday to settle back above $50 a barrel, with violence in Libya and concerns surrounding Iran’s nuclear program feeding worries about global oil supplies. Gold futures settled lower for a second straight session at $1,204.40. The dollar DXY, +0.27% dipped against major rivals.
Source: Market Watch
