Benchmarks turned in mixed performances on Wednesday following reports of Gary Cohn’s resignation. Both the Dow and the S&P 500 declined to finish in the red, however, the Nasdaq eked out gains due to a surge in the shares of Facebook and Alphabet. Meanwhile, Trump considered imposing heft tariffs on a number of Chinese imports. Trade deficit in the U.S. touched a near 10-year high.
The Dow Jones Industrial Average (DJI) decreased 0.3% to close at 24,801.36. The S&P 500 lost 0.05% to close at 2,726.80. The tech-laden Nasdaq Composite Index closed at 7,396.65, increasing 0.3%. The fear-gauge CBOE Volatility Index (VIX) decreased 4.7% to close at 17.49. Decliners outnumbered advancers on the NYSE by a 1.23-to-1 ratio. On Nasdaq, a 1.66-to-1 ratio favored advancing issues.
What Are the Benchmarks Doing?
The Dow shed 82.8 points to finish in the negative territory on Wednesday. The S&P 500 also declined 1.32 points to finish in the red. Of the 11 major segments of the S&P 500, eight ended in the red.
The laggards were led by consumer staples and energy shares. The Consumer Staples Select Sector SPDR ETF (XLP) and the Energy Select Sector SPDR ETF (XLE) declined 0.9% and 0.8%, respectively.
The Nasdaq surged 24.6 points to finish in the positive green. The tech-laden index also hit a session high during afternoon trade. Gains for the Nasdaq were buoyed by a surge in the shares of Facebook (FB - Free Report) and Alphabet (GOOGL - Free Report) , which gained 2.2% and 1.3%, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gary Cohn Resigns as Trump’s Economic Advisor
Bloomberg had reported on Tuesday that President was skeptical about economic advisor Gary Cohn continuing in his role if import tariffs are imposed. Also, CNBC reported that a source close to Cohn stated that the latter was ‘contemplating’ about whether or not to continue with his current role.
The report did come true as the head of Trump’s National Economic Council, Gary Cohn stepped down from his role late on Tuesday. He had been working to prevent the tariffs from being imposed. He had also organized meetings between Trump and some important executives from the U.S. metals industries to discourage the President from imposing tariffs. He was largely viewed an advocate of free trade and a patron of globalist policies under Trump.
Cohn’s resignation did not bode well for broader markets in general and weighed heavily on the investor sentiment.
European Union Discusses Imposing Tariff on US Goods
In a not so surprising move, the European Union Commissioner Cecilia Malmström announced at a press conference that EU was ‘discussing’ about which U.S. products it would impose tariffs on if Trump levies hefty tariffs on steel and aluminum imports.
Malmström made it very clear that any action would be taken in compliances with the rules and regulations established by the World Trade Organization and also stated that a trade war would not benefit anyone ultimately. Malmström also commented that “it would put thousands of European jobs in jeopardy and it has to be met by a firm and proportionate response."
Trump Contemplates on Imposing Tariffs on Chinese Imports
According to a Bloomberg report, Trump and his team has been considering imposing import tariffs on a variety of Chinese products. The report also stated that anything from shoes and clothing to consumer electronics would be hit with hefty tariffs. Further, the Trump administration is also considering reducing Chinese investment in the U.S. on grounds that it feels that the Chinese are violating intellectual property rights. Such reports intensified speculations of a possible trade war and weighed on the broader market.
In separate news, White House press secretary Sarah Sanders announced that Trump’s tariff plan might offer some exemption to both Canada and Mexico because both the countries are key trading partners of the U.S. Trump is lasted to announce further details on the proposed tariff plan by Friday.
The Federal Reserve in its Beige Book stated that the economy grew at a ‘modest to moderate’ pace during the months of January and February. Additionally, per the Beige Book “prices increased in all districts,” and employers from majority of the districts increased benefit packages due to ‘tight labor market conditions.’
Meanwhile, the U.S. trade deficit hit a near 10-year high after increasing 5% in January. Per the Commerce Department the deficit increased to $56.6 billion in January from $53.9 billion in December.
Finally, the Automatic Data Processing Inc. reported that the private sector in the U.S. added 235,000 jobs in February versus an estimated increase of 205,000 jobs. This also marks the fourth month on the trot when the private sector job additions have been more than 200,000.
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