US markets closed mostly lower; Nasdaq bucks the trend

08 Mar 2018 Evaluate

The US markets closed mostly lower on Wednesday, with the S&P 500 index and the Dow Jones Industrial Average closed lower as the resignation of top White House economic adviser Gary Cohn stoked fears of a trade war but the tech-laden Nasdaq bucked the trend to extend its winning streak to a fourth session. Concerns about the prospect of a global trade war, prompted by Trump’s plan to introduce tariffs on steel and aluminum imports, intensified as Cohn had opposed the tariff proposal and was widely viewed as having a moderating influence within the White House. Still, some of the selling pressure eased following the release of the Federal Reserve’s beige book, which emphasized modest economic growth and moderate inflation, helping the indexes to bounce off intraday lows. Separately, the Atlanta Federal Reserve’s GDPNow forecast model showed that the US economy is on track to expand at a 2.8 percent annualized rate in the first quarter following data on domestic vehicle sales in February and trade balance in January.

Meanwhile, the US central bank’s assessment appeared to indicate a slight strengthening of the labor market since it last issued its Beige Book report in mid-January. Businesses are reporting persistent labor market tightness across the United States, with accelerating wage gains in many regions that bolstered the case for interest rate increases. The report added that several districts reported continued worker shortages across most sectors, which said they were often reported by businesses in the construction, information technology and manufacturing sectors. The Fed also noted that four of its 12 districts saw a marked increase in steel prices due in part to a decline in foreign competition. President Donald Trump announced last week a plan to impose a 25 percent tariff on steel imports. Overall, US economic activity expanded at a modest to moderate pace in January and February and price gains were moderate. Those assessments were similar to those from its prior Beige Book report.

On the economy front, the US trade deficit climbed 5% in January and hit a nearly 10-year high, continuing a steady rise since President Trump took over that could exacerbate already tense disputes between the administration and key trading partners. The US trade deficit rose to $56.6 billion in January from $53.9 billion in December. The deficit in January was 16% higher compared with the same month in 2017, when President Trump took office. Exports fell 1.3%, largely reflecting a big drop in the volatile category of commercial aircraft shipments. Exports of oil, chemicals and other industrial supplies also declined. Imports were unchanged at $257.5 billion. The biggest increase in petroleum imports in three years was offset by declines in cellphones, computer chips and other consumer-related goods.

On the other hand, private-sector employment remained robust in February, as employers added 235,000 jobs. That was increased by 10,000 in the latest data. February is the fourth month in a row where job gains were 200,000 or higher. Details of Automatic Data Processing Inc. report showed that small firms added 68,000 jobs in February, medium-size businesses added 97,000, and large companies added 70,000. Job gains were led by leisure and hospitality and retail as consumer spending kicked up.

The Dow Jones Industrial Average lost 82.76 points or 0.33 percent to 24,801.36, the S&P 500 was down by 1.32 points or 0.05 percent to 2,726.80, while the Nasdaq gained 24.642 points or 0.33 percent to 7,396.65.

US markets closed mostly lower; Nasdaq bucks the trend

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