U.S. stocks retreat as investors eye economic data

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27th February 2024 – (New York) Wall Street experienced a modest retreat on Monday, with major indices dipping as market participants braced for a week filled with economic reports that could cast new light on the inflationary trajectory and the broader economic landscape.

The Dow Jones Industrial Average edged down by 62.30 points, a modest decline of 0.16 per cent, to close at 39,069.23. The S&P 500, retreating from recent record-setting performances, saw a reduction of 19.27 points, or 0.38 per cent, ending the session at 5,069.53. Meanwhile, the Nasdaq Composite Index, typically tech-heavy, shed a slight 20.57 points, or 0.13 per cent, to finish at 15,976.25.

Monday’s market saw the majority of the S&P 500’s sectors in the red. Utilities and communication services were the day’s primary laggards, each descending by more than 2 per cent. Conversely, energy and consumer discretionary sectors bucked the downtrend, each posting gains.

Healthcare emerged as a strong performer thus far in the year, outstripping the broader S&P 500 with a 7.8 per cent increase compared to the latter’s 6.5 per cent.

In a significant reshuffle, Amazon was inducted into the Dow Jones Industrial Average, ushering out Walgreens Boots Alliance. Amazon’s over 80 per cent surge in share value over the past year stands in stark contrast to the Dow’s struggle to mirror the rapid growth of the tech sector, which has become a cornerstone of the U.S. economy. The Dow’s industrial slant has previously been cited as a reason for its lag behind indices with greater tech representation like the Nasdaq.

The Dow’s inclusion of Amazon is part of a broader recalibration as the index seeks to reflect the technological pivot of the economy. Despite this move, historical trends suggest that newly included stocks do not necessarily ensure an immediate boost to the index’s performance.

The equity market on Monday was also grappling with shifting U.S. Treasury yields. The benchmark 10-year note experienced fluctuations, ultimately rising slightly to 4.283 per cent, adding to investors’ caution.

Housing market data added another layer of complexity, with new home sales for January falling below forecasts. The high mortgage rates have seemingly cooled demand, with new single-family home sales creeping up by only 1.5 per cent according to the latest figures.