Stock Market News for Mar 17, 2021

The Dow and the S&P 500 snapped their record winning streak to end in the red on Tuesday after a series of economic data disappointed investors as they await results from the Federal Reserve policy meeting scheduled to release today.

The Dow Jones Industrial Average (DJI) fell 127.51 points, or 0.4%, to close at 32,825.95 and the S&P 500 slid 6.23 points, or 0.2%, to close at 3,962.71. The Nasdaq Composite Index closed at 13,471.57, adding 11.86 points, or 0.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 1.2%, to close at 19.79. Declining issues outnumbered advancing ones for 1.77-to-1 ratio on the NYSE and a 2.31-to-1 ratio on the Nasdaq favored decliners.

How Did the Benchmarks Perform?

Of the 11 major sectors of the S&P 500, seven ended in the red on Tuesday, with the energy sector declining 2.8%, followed by more than 1.1% drop in industrials and financials sectors. The Dow broke its seven-day winning streak. The blue-chip index was weighed down by decline in heavyweights like The Boeing Company BA that fell 3.9%. There was at least 2% decline in shares of American Express Company AXP, Chevron Corporation CVX and Honeywell International Inc. HON.

The Nasdaq eked out gains yesterday backed by rally in tech bigwigs like Facebook, Inc. FB that closed 2% higher for the session along with at least 1.3% jump in shares of Apple Inc. AAPL and Alphabet Inc. GOOGL. Facebook and Applehold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On Tuesday, the S&P 500 posted 72 new 52-week highs and no new lows, while the Nasdaq Composite recorded 214 new highs and 13 new lows. A total of 12.2 billion shares were traded on Tuesday, higher than the last 20-session average of 12.2 billion.

Investors Await FOMC Meeting Results

On Tuesday, the Federal Reserve begun its two-day policy meeting and investors expect to get more guidance from the FOMC on interest rates and inflation on Mar 17. Rally in stocks last week was led by optimism about a $1.9 trillion fiscal stimulus package and ongoing vaccination drives. However, investors expect policymakers to raise economic forecasts and keep rates unchanged to remain accommodative for the foreseeable future.

Additionally, the optimism among investors has helped the VIX fall below 20 and hit its lowest level since February of last year.

Retail Sales Fall More than Expected

On Mar 16, the U.S. Census Bureau reported that retail sales declined 3% in February, much lower than the consensus estimate of 0.7% decline. The figure for January however was positive revised to a 7.6% increase, and was the biggest increase since government eased lockdown measures last May.

Per the report, lapse in government aid and unusually bad weather accounted for the decline in retail sales last month. Sales fell across major retailers except two major household staples, i.e., groceries and gasoline, which rose 0.1% and 3.6% respectively. There was a sharp drop in sales across bars and restaurants, home centers, department stores and Internet retailers.

Other Economic Data

The Federal Reserve reported on Tuesday that industrial production fell 2.2% in February lagging far behind the consensus estimate of 0.4% increase and January’s upwardly revised 1.1% rise. The Fed reported that decline in production was majorly due to severe winter storms last month. Manufacturing output and mining production dropped 3.1% and 5.4%, respectively last month. In fact, some petroleum refineries, petrochemical operations, and plastic resin plants suffered damage due to the deep freeze and were offline for the rest of the month. However, output of utilities increased 7.4%. In the same report, the Fed mentioned that capacity utilization declined to 73.8% in February, the lowest rate since October. The figure failed to surpass the consensus estimate of 75.6% and January’s downward revised figure of 75.5%.

In a separate release, the National Association of Home Builders reported that home builder’s confidence dropped to 82 in March, its lowest reading since August last year. Constant rise in cost to build due to higher lumber prices is driving the growing pessimism within the construction industry.

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