U.S. equities finished lower, as lingering concerns over slowing global growth pressured sentiment, and the Federal Reserve’s latest Beige Book report was somewhat somber. Treasury yields lost ground and the U.S. dollar was little changed following a slightly smaller-than-expected rise in private sector payrolls as measured by ADP, while the trade gap widened to its largest deficit in just over a decade. Crude oil prices were mixed following a bearish inventory report, while shares of Dow component Exxon fell after it disclosed higher future capital expenditures, adding further pressure to the energy sector. Gold also finished lower.
The Dow Jones Industrial Average (DJIA) declined 133 points (0.5%) to 25,673, the S&P 500 Index decreased 18 points (0.7%) to 2,772, and the NASDAQ Composite fell 70 points (0.9%) to 7,506. In moderate volume, 880 million shares were traded on the NYSE and 2.2 billion shares changed hands on the NASDAQ. WTI crude oil dipped $0.34 to $56.22 per barrel and wholesale gasoline was up $0.02 to $1.79 per gallon. Elsewhere, the Bloomberg gold spot price traded $1.06 lower to $1,286.95 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was unchanged at 66.86.
The ADP Employment Change Report showed private sector payrolls rose by 183,000 jobs in February, below the Bloomberg forecast of a 190,000 gain, while January’s increase of 213,000 jobs was revised to a 300,000 increase. Today’s ADP data, which does not include government hiring and firing, comes ahead of Friday’s broader February nonfarm payroll report, expected to show jobs grew by 181,000 and private sector payrolls rose by 180,000. The unemployment rate is forecasted to dip to 3.9% from 4.0% and average hourly earnings are projected to rise 0.3% month-over-month (m/m).
The trade balance showed that the deficit widened more than expected to $59.8 billion in December, its largest since October 2008 and compared to estimates of $57.9 billion. November’s deficit was revised to $50.3 billion from the previously-reported $49.3 billion. Exports were down 1.9% m/m at $205.1 billion, while imports increased 2.1% to $264.9 billion.
In afternoon action, the Federal Reserve released its Beige Book, an anecdotal look at business activity across the nation used as a monetary policy preparation tool for the two-day meeting set to end March 20th. The report showed that the pace of growth in the economy was “slight-to-moderate” in ten of the 12 districts reporting, while the other two indicated “flat economic conditions.” Consumer spending was “mixed” with many districts noting a decline in retail and auto sales, citing the bitter winter weather and higher credit costs, while also stating that the partial government shutdown also affected a range of sectors, including tourism, real estate, and restaurants. Manufacturing activity improved, however weakening global demand, higher costs associated with tariffs and the persistent trade uncertainty were chief among company concerns. Most districts reported job growth and higher wages, but that the labor market remains tight.
Treasuries were higher, with the yields on the 2-year and 10-year notes down 3 basis points to 2.51% and 2.68%, respectively, while the 30-year bond decreased 2 basis points to 3.06%.
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