U.S. equities are looking to finish out the week on a solid down note, as global growth concerns on the heels of disappointing European economic data and trade worries are sapping sentiment. Treasury yields are also soundly lower amid mixed domestic economic data, with a better-than-expected rise in existing home sales being countered by manufacturing and service data that missed expectations. Dow member Boeing is battling more negative headlines surrounding its 737 Max jet and Dow component Nike is seeing pressure after it warned of a sales slowdown. Gold and the U.S. dollar are higher and crude oil prices are trading to the downside. Overseas, European stocks were lower following disappointing economic data in the region and continued Brexit focus.
At 12:55 p.m. ET, the Dow Jones Industrial Average is down 1.5%, the S&P 500 Index is decreasing 1.6%, and the Nasdaq Composite is 2.0% lower. WTI crude oil is descending $1.47 to $58.51 per barrel, Brent crude oil is losing $1.48 to $66.38 per barrel, and wholesale gasoline is down $0.03 at $1.87 per gallon. The Bloomberg gold spot price is trading $3.77 higher to $1,313.13 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—is rising 0.1% at 96.62.
Shares of Dow member Boeing (BA $365) are facing headwinds in early trading after airline Garuda Indonesia sought to cancel an order for 49 Boeing 737 Max jets, valued at approximately $6 billion. Shares are under pressure.
(GM $37) announced that it will invest $300 million and add 400 jobs at a plant in Michigan for its new Chevrolet Electric Vehicle. It also shared a total new investment commitment of $1.8 billion in its U.S. manufacturing operations across six states, adding a total of 700 new jobs. GM is trading to the downside.
Economic calendar delivers mixed data
The preliminary Markit U.S. Manufacturing PMI Index showed that growth decelerated, declining to 52.5 in March, from February's 53.0 figure, and versus Bloomberg estimates calling for a rise to 53.5. In addition, the preliminary Markit U.S. Services PMI Index showed growth was slower than expected for the key U.S. sector this month, falling to 54.8 from February's 56.0 figure, versus expectations to nudge lower to 55.5. Readings above 50 for both indexes denote expansion.
Existing-home sales in February jumped 11.8% m/m to an annual rate of 5.51 million units, compared to expectations of a rise to 5.10 million units and verses January's downwardly-revised 4.93 million rate. Sales of single-family homes were up m/m and were 1.4% below year-ago levels, while purchases of condominiums and co-ops were unchanged m/m but were down 5.0% y/y. The median existing-home price was up 3.6% y/y to $251,400. Unsold inventory came in at a 3.5-months pace at the current sales rate, up from 3.4 months a year ago. Sales rose in all regions except the Northeast, which was flat. The South and West regions were below year ago levels, while the Northeast was up y/y and the Midwest was roughly flat.
Wholesale inventories rose 1.2% m/m during January, well above expectation for a 0.1% gain, while December's figure was revised to a 1.1% m/m increase.
Treasuries are higher, with the yield on the 2-year note decreasing 7 basis point (bps) to 2.33%, while the yield on the 10-year note is 9 bps lower at 2.44%, and the 30-year bond rate is losing 8 bps to 2.88%. The markets are paying close attention to the yield curve, as the spread between the 3-month and 10-year notes inverted today.
On Wednesday, as expected, the Federal Reserve left its target range for the federal funds rate unchanged and while economic and inflation projections were lowered and the Fed plans to end its balance sheet reduction soon.
Europe lower as weak regional data weighs on markets
Stocks in Europe finished lower, as weakening economic data combined with a subdued global outlook from the Fed earlier in the week weighed on sentiment. Markit's Eurozone composite Purchasing Managers' Index (PMI) fell to 51.3 in March from 51.9 the previous month, and below expectations of 52.0. Germany's manufacturing PMI contracted for the third month in a row, helping send the country's bond yields lower, and French composite PMI numbers also missed estimates. In other developments, bond yields in the region were mostly lower and the euro lost ground versus the greenback, while the British pound moved higher versus the U.S. dollar. The European Union (EU) agreed to an extension of the U.K.'s Brexit withdrawal date, while the length of the delay hinges on whether the U.K. Parliament will approve the Prime Minister's divorce agreement next week.
The U.K. FTSE 100 Index was 2.0% lower, France's CAC-40 Index was down 1.9%, Germany's DAX Index lost 1.5%, Italy's FTSE MIB Index and Switzerland's Swiss Market Index descended 1.4%, and Spain's IBEX 35 Index declined 1.7%.
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