Stocks finished mixed on Wednesday as overnight weakness spurred by the resignation of “globalist” economic advisor Gary Cohn from the Donald Trump Administration fueled fears of further trade protectionism following the announcement of tariffs on steel and aluminum. This gave way to an end-of-session rally after the White House told reporters that “carve outs” from the tariffs were possible on a case-by-case and country-by-country basis.
But as large-caps closed the opening gap, sellers reappeared. On a technical basis, the it’s do-or-die time as the rally off of the February panic lows has resulted in a narrow wedge formation. A breakout, either up or down, is likely now.
In the end, the Dow Jones Industrial Average lost 0.3%, the S&P 500 lost 0.1%, the Nasdaq Composite gained 0.3% amid persistent strength in big-cap tech stocks and the Russell 2000 gained 0.8%. Treasury bonds rallied, pushing down yields. The dollar, gold and crude oil all weakened.
Breadth was mixed, with advancers and decliners nearly evenly matched on the NYSE amid 96 new highs and 47 new lows. Among the big movers, Abercrombie & Fitch Co. (NYSE:ANF) gained 13.2% after reporting better-than-expected earnings of $1.38-per-share (28 cents ahead of estimates) on a 15.2% rise in revenues. Forward guidance was strong as well.
Technology stocks were among the best performers, with Facebook Inc (NASDAQ:FB) up 2.2% and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) up 1.3%. Apple Inc (NASDAQ:AAPL) was an exception, falling 1% as rumors of a FaceID equipped iPad fly. Energy stocks were laggards, with Exxon Mobil Corporation (NYSE:XOM) down 2.5% after disappointing with its growth plans. Bank stocks were weak too, with Wells Fargo & Co (NYSE:WFC) down 0.8%.
It’s unlikely that Trump is going to soften his trade stance, as the market seems to want to believe, with a signing of the tariff bill scheduled for tomorrow. Watch for partners in Europe and Asia to retaliate, which will only inflame Trump and open the door for countervailing duties.
Consider that the U.S. trade deficit widened to $56.6 billion in January, the highest level since October 2008.
No matter what Trump does or doesn’t do tomorrow, focus will shift back to the inflation/yields/rate hike meme that rattled markets back in February when the latest jobs numbers are released on Friday. Economists are looking for the unemployment rate to fall to 4% and the annualized average hourly earnings growth rate to potentially increase to 3%.
Expectations are high following the release of a solid Beige Book today, with all 12 Federal Reserve bank districts highlighting strong employment growth and most seeing wage gains.
Check out Serge Berger’s Trade of the Day for March 8.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
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