U.S. stocks finished lower Thursday after a sudden breakdown in denuclearization talks with North Korea weighed on sentiment, even though main indexes posted strong gains in February. Better-than-expected fourth-quarter gross domestic product data helped to offset some of the selling pressure during the session.
How did stock indexes fare?
The Dow Jones Industrial Average DJIA, -0.27% fell 69.16 points, or 0.3%, to 25,916; the S&P 500 index SPX, -0.28% shed 7.89 points, or 0.3%, to 2,784.49; and the Nasdaq Composite Index COMP, -0.29% declined 21.98 points, or 0.3%, to 7,532.53.
All indexes rose for a second month in a row, with the Dow rallying 3.7% in February, the S&P 500 up 3% and the Nasdaq gaining 3.4%.
What drove the market?
White House spokeswoman Sarah Sanders told reporters at a news conference that a U.S.-North Korean nuclear agreement couldn’t be reached at the summit in Hanoi because the isolated nation wanted more sanctions lifted than Trump would allow.
President Donald Trump’s inability to persuade North Korean leader Kim Jong Un to give up nukes comes about eight months after the first meeting between the two leaders in Singapore failed to achieve concrete goals. Still, the president expressed hope that a pact could be achieved and described North Korea as having “tremendous potential.”
The political developments in Vietnam followed poor data out of China, with the country’s official manufacturing purchasing managers index figures contracting for a third consecutive month.
On Wednesday, U.S. Trade Representative Robert Lighthizer said the U.S. would abandon — for now — its threat to raise tariffs to 25% on $200 billion of Chinese goods on March 2.
The Commerce Department’s estimate of fourth-quarter GDP growth showed the U.S. economy growing at a rate of 2.6%, well above consensus expectations of 1.9%, per a MarketWatch poll of economists. GDP grew at 2.9% during 2018, according to the preliminary estimates by the Commerce Department, representing the best growth in three years. However, market participants highlighted the economic reports highlight expansion that is tapering from heady levels of a 4.2% growth rate in the second quarter of 2018.
Beyond GDP data, the Labor Department estimated that the number of American applying for unemployment benefits in the week ended Feb. 9 rose by 4,000 to a seasonally-adjusted rate of 239,000. Economists polled by MarketWatch were expecting 225,000.
The Chicago purchasing managers index rose 8 points to a reading of 64.7 in February, the largest increase since last February.
The U.S. homeownership rate in the fourth quarter was 64.8%, the Commerce Department reported, in line with expectations of economists polled by MarketWatch. Meanwhile, the national vacancy rate was 6.6% for rental housing and 1.5% for owner-occupied housing.
Federal Reserve Vice Chairman Richard Clarida said the Fed wants to be “very, very clear” that it is not altering its 2% inflation target, as it considers ways to better use that data to inform rate-hike policy. The official was speaking at the 35th Annual NABE Economic Policy Conference in Washington on “Promoting Global Growth and Domestic Economic Security.”
Fed Chairman Jerome Powell is also slated to speak Thursday at 8:15 p.m.
What were strategists saying?
“The GDP numbers were better than expected,” Marvin Loh, global macro strategist at State Street, told MarketWatch, adding that the numbers were boosted by better-than-expected business investment.
“Companies look like they’re making investment in technologies, and that’s a positive going forward, that despite the trade concerns and slowing growth expectations, businesses are still investing,” he said. “Theoretically this should drive better productivity growth. Whether we actually see this remains to be seen. It’s just one report, but it’s definitely a good one.”
“Geopolitical tensions continue to weigh on market sentiment as stock markets around the world are drifting lower. This shift in sentiment, triggered yesterday by rising tensions between India and Pakistan, has found further strength with the lack of an agreement following Donald Trump and Kim Jong Un’s meeting in Hanoi,” said Pierre Veyret, technical analyst at ActivTrades.
Which stocks were in focus?
Horizon Pharma PLC HZNP, +32.77% shares soared 33% after the company announced positive results in a late-stage trial of a treatment for active thyroid eye disease, or TED.
SeaWorld Entertainment Inc. SEAS, +7.87% shares rose 7.9% after the amusement-park company reported a narrower-than-expected fourth-quarter loss and revenue that topped forecasts.
Shares of HP Inc. HPQ, -17.27% slumped 17% after the company reported falling market share and revenue for its printer-supply business.
J.C. Penney Co. JCP, +22.58% stock soared 23% after the retailer beat Wall Street earnings and revenue estimates for the fourth quarter, while announcing the closure of 18 full-line stores and 9 ancillary home and furniture stores.
Shares of Celgene Corp. CELG, -8.65% slid 8.7% after Bristol-Myers Squibb’s BMY, +1.37% largest shareholder announced its opposition to Bristol’s planned takeover of Celgene. Bristol-Myers Squibb shares were up 1.4%.
L Brands Inc. LB, -4.60% shares declined 4.6% after the parent company of Victoria’s Secret released fourth-quarter earnings that fell short of expectations.
How did other assets perform?
Asian markets closed mostly lower with the Nikkei 225 NIK, -0.79% and the Shanghai Composite Index SHCOMP, -0.44% both ending weaker. European stocks were moderately higher with the Stoxx 600 SXXP, +0.06% modestly up.
In commodities markets, crude oil CLJ9, +0.54% gained, while gold GCJ9, -0.49% settled lower and the value of the dollar DXY, +0.12% was virtually unchanged.
—Mark DeCambre contributed to this article
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