Wall Street ended mostly lower on Monday as fears of global economic slowdown and an impending U.S. recession continued to worry investors. Markets were extremely choppy in absence of any positive developments either on trade war front or economic data. The S&P 500 and Nasdaq Composite finished in the red while the Dow managed to gain marginally.
The Dow Jones Industrial Average (DJI) closed at 25,516.83, gaining 0.1%. The S&P 500 Index (INX) lost 0.1% to close at 2,798.36. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,637.54, also shedding 0.1% or. A total of 6.96 billion shares were traded on Monday, lower than the last 20-session average of 7.69 billion shares. Advancers outnumbered decliners on the NYSE by 1.03-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.10-to-1 ratio. The CBOE VIX decreased 0.9% to close at 16.33.
How Did the Benchmarks Perform?
The Dow ended in positive territory with 12 stocks of the 30-stocks blue-chip index finished in the green while eighteen ended in the red. The tech-heavy Nasdaq Composite finished in the red due to weak performance by large-cap tech stocks. The S&P 500 also closed in the red. For the first time since Mar 12, the broad-market index closed below technically important 2,800 mark. The Consumer Discretionary Select Sector SPDR (XLY) gained 0.6% while the Technology Select Sector SPDR (XLK) lost 0.4%. Notably, five out of eleven sectors of the benchmark index closed in the red while six finished in the green.
Yield Curve Inversion Continues
On Mar 20, the Fed lowered its estimate for U.S. GDP growth rate to 2.1% in 2019 from 2.3% projected in December. The central bank also indicated that it was unlikely to raise rates again this year.
The new-found dovishness of the Federal Reserve heightened fears of global economic slowdown. Further, on Mar 22, the yield on the 10-year Treasury note fell below the yield on the 3-month Treasury bill for the first time since 2007.
Notably, on Mar 25, the yield curve inversion further extended further as the yield on 10-year bonds declined to 2.388%, its lowest level since December 2017. In fact, several economists consider inversion between the 3-month and 10-year bond yields as a clear indication of an upcoming recession.
Apple’s Event Fails to Bolster Market
On Mar 25, Apple Inc. (AAPL - Free Report) launched a streaming video service called Apple TV+, which will feature its own content. The company introduced a new Apple News app called Apple News+, which includes magazine content as well as a video game bundle called Apple Arcade. A subscription to the App will cost $9.99 per month. Moreover, the tech behemoth said that it will release its own credit card, called Apple Card, in partnership withThe Goldman Sachs Group Inc. (GS - Free Report) .
However, investors remained concerned about Apple’s decision to morph into a software-centric subscription-based company from a pure play hardware company. Although, subscription-based services generate recurring revenues, the market is already competitive.
Unlike other streaming video services, Apple TV+ does not have a video library. Moreover, the company maintained silence about the cost of Apple TV+. Apple also refrained from discussing its future content spending plans.
Consequently, shares of Apple declined 1.2%. Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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