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Wall Street Slumps on Weak Chinese Trade Data Market Slips as China’s Exports Take a Spill
(about 3 hours later)
Wall Street markets dipped on Monday, as unexpectedly weak data in China tempered enthusiasm over the strength of the global economy. The stock market drifted lower on Monday, weighed down by soft data out of China and Boeing’s latest production setback.
The Dow Jones industrial average fell 0.21 percent, ending the day at 16,418.68. The Standard & Poor’s 500 stock index lost 0.05 percent, to 1,877.17, and the Nasdaq composite dropped 0.04 percent, to 4,334.45. Merger and acquisition announcements, however, as well as news about companies including Facebook and Alexion Pharmaceuticals, helped keep the losses from being bigger.
China’s exports unexpectedly tumbled 18.1 percent in February, against expectations of a 6.8 percent rise, swinging the trade balance into deficit and adding to fears of a slowdown in the world’s second-largest economy, despite the Lunar New Year holidays being blamed for the slide. China’s exports unexpectedly tumbled 18.1 percent in February, against expectations for a 6.8 percent rise, swinging the trade balance into deficit and adding to fears of a slowdown in the world’s second-largest economy.
The data was a minor weight on positive sentiment generated by Friday’s better-than-expected United States payrolls report, which sent the S.&P. 500 to a record high for a second consecutive session. “There’s reasons to be a little cautious on the market. There’s a little bit of profit-taking,” said Paul Zemsky, head of asset allocation at ING Investment Management.
Sunday marked the five-year anniversary of the S.&P.'s 12-year low of 676.53, when the economy suffered its worst recession in seven decades. “But the numbers are not persuasive enough to make me want to sell U.S. stocks,” Mr. Zemsky said, referring to the weak Chinese economic report. “The impact would have to go beyond what we already expect from emerging markets.”
“That five-year anniversary has given market investors a sense of pause rather than a sense of enthusiasm because there is still this lingering fear that resides in the approach people have with the market - have we come too far, too fast? Are valuations justified?” said Peter Kenny, chief executive of Clearpool Group in New York. Boeing shares lost $1.65, or 1.3 percent, to $126.89, after another production setback for the company’s 787 Dreamliner, as hairline cracks were discovered in the wings of about 40 of its newest jets. The weekend disappearance and presumed crash of a Malaysian airliner made by Boeing was another headwind for the stock.
In a speech at the Bank of France, the Philadelphia Fed president, Charles Plosser, said severe winter weather probably affected job growth in February, the latest United States central banker to suggest that some weakness in the labor market was only temporary, indicating the Fed will stay on course in winding down its stimulus measures. The Dow Jones industrial average fell 34.04 points or 0.2 percent, to 16,418.68. The Standard & Poor’s 500-stock index lost 0.87 points, or less than 0.1 percent, to 1,877.17. And the Nasdaq composite index dropped 1.78 points, to 4,334.45.
Boeing said on Friday that “hairline cracks” had been discovered in the wings of about 40 787 Dreamliners that are in production, another setback for the company’s newest jet. Separately, the disappearance of a Malaysian jetliner, a Boeing 777-200ER, is an “unprecedented aviation mystery,” a senior official said on Monday. Shares fell 1.28 percent. Freeport McMoRan Copper and Gold lost 81 cents, or 2.5 percent, to close at $31.38 as signs of a slowing China sent copper prices to the lowest in more than eight months.
McDonald’s reported a bigger-than-expected drop in comparable global sales at established restaurants for February, with competition and bad weather battering United States sales. Shares ended the day down 0.31 percent. Facebook shares rose $2.23, or 3.2 percent, to $72.03 after UBS raised its price target on the social media giant to $90, from $72.
Chiquita Brands and an Irish rival, Fyffes, Europe’s largest distributor, have struck an all-stock merger deal to create the world’s biggest banana supplier. Chiquita shares jumped 10.7 percent. Alexion jumped $11.95, or 7.1 percent, to $180 after it raised its profit and sales forecasts for the year. The French government agreed to increase reimbursement payments for the company’s treatment for two rare blood disorders.
United Rentals, the world’s largest equipment rental company, said on Sunday that it had agreed to acquire the privately held National Pump, the second-largest specialty pump rental company in North America, for $780 million. Its shares closed up 3.8 percent. Chiquita Brands climbed $1.16, or 10.7 percent, to $12 after it agreed to acquire Fyffes, a big Irish produce distributor, in a $526 million all-stock deal to create the world’s biggest banana supplier.
Asian stocks fell sharply , the dollar dropped from recent highs and some European stocks also declined. United Rentals gained $3.33, or 3.8 percent, to $91.82 after the equipment rental company said it had agreed to buy privately held National Pump, a leading specialty pump rental company in North America, for $780 million.
The Nikkei stock average in Tokyo shed 1 percent, retreating from a six-week high reached on Friday. The CSI 300 index in China slid to its lowest point in nearly nine months, and the Hang Seng Index in Hong Kong shed 1.8 percent “Deals in general show people are looking for growth and good ideas,” Mr. Zemsky of ING said. “They’re taking shares out of the market, and it shows there’s confidence in investors’ minds.”
European shares faded, and the continued weakness in the DAX and big German firms that sell to Russia offset gains by Portuguese, Italian and Spanish stocks. Shares in FMC, the chemicals manufacturer, rose $5.23, or 6.7 percent, to $83.10 after it said it would split into two companies, one comprising its minerals business and the other its agricultural, health and nutrition businesses.
Merger activity in France helped the CAC 40, but mining firms sensitive to China’s ferocious appetite for raw materials weighed on London’s FTSE 100 as commodities and related currencies lost altitude. In the bond market, interest rates were little changed. The yield on the Treasury’s 10-year note slipped to 2.78 percent, from 2.79 percent late Friday, while its price rose 3/32, to 99 24/32.