Market Snapshot: U.S. stocks retreat as materials, industrial sectors weigh

U.S. stocks were mostly lower on Wednesday, with major indexes coming off early gains, as the materials and industrial sectors both weighed on the market.

Initial gains came after the latest data on inflation and consumer activity pointed to an economy that continued to get stronger, though not at a pace that suggested an immediate risk of overheating. Investors also continued to monitor developments out of Washington, and what new political appointments could mean for trade policy.

What are the major indexes doing?

The Dow Jones Industrial Average DJIA, -1.05%  fell 109 points, or 0.4%, to 24,897. The S&P 500 SPX, -0.52% was down 4 points, 0.2%, to 2,761. The Nasdaq Composite Index COMP, -0.39% slipped less than a point to 7,511.

If the Nasdaq closes in positive territory, that will mark its eighth positive session of the past nine.

What is driving the markets?

U.S. retail sales fell 0.1% in February, the third straight monthly decline. However, sales grew 0.3% if autos and gas are stripped out. Separately, the producer-price index showed wholesale inflation up 0.2% in February, above the 0.1% that had been expected, but down from the 0.4% advance in January.

The data helped soothe concerns that inflation was picking up, which could have led to an environment where the Federal Reserve has to become more aggressive in raising interest rates, something investors have cited as a primary concern for stocks.

Traders also continued to monitor the situation in the White House in the wake of major personnel changes. President Donald Trump recently fired Tillerson and replaced him with Central Intelligence Agency Director Mike Pompeo. In addition, top White House officials have reached out to gauge CNBC commentator Lawrence Kudlow’s interest in becoming Trump’s top economic adviser.

A major theme in recent trading has been the issue of trade protectionism and tariffs, and investors are waiting to see whether the new appointees, if confirmed, will support or oppose such policies.

What are strategists saying?

“The headline number for retail sales was a little disappointing, but excluding autos and gas it was very much in line. Separately, PPI looked a little hot, but it was also in line if you [take] out food and energy. Ultimately, what the numbers don’t show is a slowdown in the economy, and what they don’t spark is fear of rampant inflation,” said Art Hogan, chief market strategist at Wunderlich Securities. “At the very worst this is benign, but I suspect the interpretation will be positive.”

Hogan said political volatility could remain a factor in markets. “There are already fears of policy mistakes and trade protectionism, and when you layer in White House uncertainty those fears grow,” he said. “Will the new people be more protectionist? Right now the economy and earnings are solid, but are we going to make a trade or policy mistake that could slow earnings or lead into a recession that will turn this market over?”

Which stocks look like key movers?

Both the materials and industrial sectors are seen as having the most exposure to trade issues, and both fell on Wednesday. The industrial sector fell 0.3% while the materials sector was off 0.6%. Among the most notable decliners, Boeing Co. BA, -3.89%  fell 1.9%.

Shares in Signet Jewelers Ltd. SIG, -17.24% dropped 18% on heavy volume after the parent company for the Zales, Kay and Jared chains unveiled a restructuring plan to be carried out over the next three years.

Broadcom Ltd. AVGO, -1.56%  fell 0.6% after the chip maker said it has withdrawn its hostile bid to buy Qualcomm Inc. QCOM, -2.51% following Trump’s move this week to block the deal, citing national security concerns. Qualcomm fell 1.6%.

Ford Motor Co. F, +2.92%  said it was issuing a safety recall of about 1.38 million vehicles in North America, including 1.30 million vehicles in the U.S., for potentially loose steering wheel bolts after reports of two accidents and one injury. The stock rose 3.6%.

Analysts at Stifel said that new product announcements from Fitbit Inc. FIT, -0.37%  could expand the company’s user base. Shares were unchanged.

Shares of Century Aluminum Co. CENX, -3.57%  fell 2.8% despite J.P. Morgan lifting its price target on the stock to $29 from $18.

United Continental Holdings Inc.’s stock UAL, -2.02%  was 0.9% lower. The airline has recently drawn considerable flak for a dog’s death that came after a pet died an overhead bin during a flight.

See: United had the most animal deaths in 2017

How are other markets performing?

European stocks SXXP, -0.02% traded higher after European Central Bank President Mario Draghi said a key bond-buying program will likely continue if underlying inflation in the region remains subdued, while Asian markets closed with losses.

Oil futures CLJ8, -0.63%  and the ICE U.S. Dollar Index DXY, +0.16% gained. Gold futures GCJ8, -0.10%  edged lower.

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