Stocks opened in negative territory and remained there for the entire session. The averages have now closed lower in five of the past six sessions and stocks are now midway through their worst weekly performance of the year. The Fed’s Beige Book report had little effect on the market as it clarified what had already been expected, namely that the government shutdown had a modest effect on the economy but affected some industries more than others. Today’s weakness has been attributed to uneasiness about the finalization of a trade deal with China. Investors are now looking to Friday’s jobs report as the next possible catalyst for stocks.
ECONOMIC EVENTS: In the U.S., ADP reported private payrolls increased 183,000 in February, which was close to expectations. The trade deficit widened 18.8% to $59.8B in December. EIA inventory data showed a greater than expected weekly 7.1M barrel rise in crude supplies.
In Fed news, economic activity continued to expand in late January and February, according to the Federal Reserve's latest Beige Book. According to the Fed, employment increased in most districts and labor markets remained tight for all skill levels.
TOP NEWS: General Electric (GE) shares continued to slide after CEO Larry Culp announced yesterday at an investor conference that he expects adjusted industrial free cash flow this year to turn negative versus the $4.5B generated in 2018. Following yesterday's presentation by Culp, influential JPMorgan analyst Stephen Tusa says he believes his unchanged price target of $6 "looks generous" and kept a Neutral rating on GE.
Exxon Mobil (XOM) shares closed 1% lower after the company held its annual investor day. Prior to the event's start, Exxon stated that it expects annual earnings potential to increase by more than 140% by 2025 from 2017 adjusted earnings, assuming an oil price of $60 per barrel and based on 2017 margins. This compares with last year's estimated increase of 135% between 2017 and 2025, based on 2017 adjusted earnings.
In M&A news, Aon (AON) announced that it was required yesterday to issue a statement "at a very early stage in the consideration of a potential all-share business combination" with Willis Towers Watson (WLTW) because the latter is subject to Irish regulatory requirements. However, Aon confirmed today that it does not intend to pursue such a business combination, sending its own shares up 4% and those of Willis Towers Watson down 6%.
Credit Suisse analyst Michael Binetti said Ross Stores (ROST) delivered "solid" Q4 earnings, despite a fashion miss in its biggest category of ladies apparel. Shares of Ross Stores, which also raised its quarterly dividend 13% and authorized a new $2.55B stock buyback program, ended up fractionally.
Also rising following its quarterly report was Dollar Tree (DLTR), which gained 5% after it reported roughly in-line earnings on better than expected sales and said it is accelerating its store optimization program.
Meanwhile, Amazon (AMZN) was in focus after the Wall Street Journal reported that the e-commerce giant will shutter all 87 of its U.S. pop-up stores but plans to expand its bookstores as well as its "4-star" stores.
MAJOR MOVERS: Among the noteworthy gainers was Zayo (ZAYO), which jumped 12.5% after it postponed its analyst day to explore strategic alternatives. Following the announcement, Bloomberg reported that a group led by Digital Colony is weighing a bid for Zayo. Also higher were Abercrombie & Fitch (ANF) and AeroVironment (AVAV), which gained a respective 20% and 9% after reporting quarterly results.
Among the notable losers was JinkoSolar (JKS), which slid 9% after Vertical Group analyst Gordon Johnson said he believes the stock is a "screaming short" given that the company has not denied they are obligated for upcoming debt due at Jinko Power. Also lower were Chico's FAS (CHS) and United Natural Foods (UNFI), which fell 10% and 9%, respectively, after reporting quarterly results.
INDEXES: The Dow fell 133.17, or 0.52%, to 25,673.46 , the Nasdaq lost 70.44, or 0.93%, to 7,505.92, and the S&P 500 declined 18.20, or 0.65%, to 2,771.45 .
