US shares ended lower on Thursday as the four major stock benchmarks snapped their longest record-setting streak since 1995 amid another pause on the Trump rally since November.
The markets have had several pauses for breath since news that Donald Trump was to become US President last year.
On Thursday, the S&P 500 closed 0.1% lower at 2,347, while the Dow Jones Industrial Average ended the day little changed at 20,620. Meanwhile, the tech-heavy Nasdaq Composite slid 0.1% to 5,814, while the wide small-cap ticker Russell 2000 fell 0.5% to 1,397.
The quartet of indices had each closed at record highs every day for the past four trading days — a feat last achieved in June 1995. But the risk-on rally came to an end on Thursday as investors appeared to pause and take stock as they awaited more details on Trump’s tax policies as well as a refresh on his controversial travel ban immigration policy.
Instead, investors once again sought out safe haven assets. Utilities, favoured for their steady income and perceived safety were the biggest gainers on the benchmark S&P 500.
After a series of legal setbacks, President Trump said Thursday that his administration is preparing to roll out a revised version of his controversial travel ban next week rather than get bogged down in a legal wrangle over the original controversial draft which he unveiled last month.
The top three fallers on the S&P 500 were travel guide publisher Tripadvisor (NASDAQ:TRIP) down 11% to $46.92, cosmetics group Coty Inc (NYSE:COTY) down 5.5% to $18.69 and Range Resources Corp (NYSE:RRC) down 5.3% to $31.24.
The S&P Midcap 400 closed down 0.1% at 1733 and led by another cosmetics group, Avon Products (NYSE:AVP) down 18.6% to $4.77 on poor earnings, while the S&P Smallcap 600 ended down 0.2$ at 856 and led by oil group Hornbeck Offshore Services (NYSE:HOS) down 26.3% to $4.75.
Late trading
US stocks pulled back from previous days of record gains on Thursday as investors sensed the market could be getting overbought.
But markets also had a moment for reflection: The stock market is having its best performance in the first month of a new US president's term since the 1960s, and the biggest increase for a new Republican president since the blue chip index that eventually became the S&P 500 debuted in 1923, according to S&P DJ Indices.
US President Donald Trump wasted no time expressing his view on Twitter today: “Stock market hits new high with longest winning streak in decades. Great level of confidence and optimism - even before tax plan rollout!”
However, on Thursday the picture was not compatible. The S&P 500 market bellwether was down 0.2% at 2343 and led by Tripadvisor Inc (NASDAQ:TRIP) down 9.7% at $47.60 after fourth quarter earnings and revenues miss targets. Next biggest faller was Range Resources (NYSE:RRC) down 5.6% to $31.16.
The S&P Midcap 400 was down 0.4% at 1727 and led by Avon Products (NYSE:AVP) down 18.9% ti $4.75 after its fourth earnings missed.
The top gainer remained luxury fashion house Kate Spade (NYSE:KATE) up 14.1% to $22.45 after the company posted a fourth-quarter earnings beat, as well as confirmed discussion of a potential takeover.
Kate Spade posted earnings of 41 cents per share, surpassing the Zacks Consensus Estimate of 35 cents per share; investors should note this number excludes 25 cents from non-recurring items. Net income was $86 million, up from $61mln in the prior-year period.
The S&P Smallcap 600 lost 0.6% to 852 and led by Hornbeck Offshore Services (NYSE:HOS) down 24.7% to $4.86. The offshore services company reported weak fourth-quarter results and a concerning outlook for the future, especially over liquidity.
Wall Street’s equities volatility gauge climbed on Thursday to its highest level since the end of January. The CBOE’s Vix index, which tracks options trades to determine investor expectations for S&P 500 volatility over the next month, climbed as much as 0.85 points to 12.82.
The gauge has risen even as the S&P 500 has pushed to new heights this week, reflecting a slight uptick in hedging activity as traders pay close attention to political news out of Washington. The Trump administration has said it will unveil some of its business tax reform plans over the next few weeks — which may include a proposal to cut the US corporate tax rate.
While the Vix has ticked up, it still remains at historically low levels.
Stoking fears of ramp up in US interest rates, growth in the US mid-Atlantic factory sector surged to the highest rate in more than three decades, underscoring the brightening outlook for the world’s biggest developed economy.
Also known as the Philadelphia Federal Reserve’s manufacturing index it soared to 43.3 this month from 23.6 in in January — marking the highest reading since 1984, according to Bloomberg data. Wall Street expected a fall to 18, which would still have been above the zero-line that separates expansion from contraction.
But there was one solitary voice holding back from the rate hike craze. No longer on the FOMC, the former Federal Reserve Chair waded into the debate and he questioned the economic gains seen on a global level.
Still an influential voice, Alan Greenspan, the former head of the Federal Reserve, warned on Thursday that even as the global economic outlook brightens, economists should beware of a “false sense of recovery”.
The 90-year old said before The Economic Club of New York that there are some signs that the economy has emerged from a long period of “stagnation” that has persisted since the end of the 2008 recession. However, it is difficult to judge whether it is a durable recovery or merely a further shift into “stagflation”, he said.
Pre-Open
US stocks are set to give back on Thursday some of their record level gains from the previous five stomping sessions, a feat not seen since 1992.
Although record highs were marked intraday on Feb 7 oil prices pulled the likes of the S&P 500 lower into the close that session. But over the past successive five days of trading the closes were not only higher, but record highs. In all, the S&P 500 has closed higher for seven trading days.
Bank stocks had salivated on Wednesday on the prospect of another US rate hike coming sooner than had been expected - which pushed stocks like Goldman Sachs (NYSE:GS), JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) to record highs.
Such was the euphoria that even oil prices firmed in spite of EIA official data showing that US oil supply inventories were three times that expected while a forecast fall in gasoline stocks turned out to be a sizeable jump too. On Thursday oil prices were higher too.
The S&P 500 market bellwether and Dow Jones Industrial Average are seen opening down 0.2% and the Nasdaq Composite 0.1% lower. All have marked record highs in the past few days.
But in data, there were signs that all this rate hike talk, while good for Wall Street banks driving tickers higher, was starting to harm Main Street.
The rate of early stage US home construction cooled at the start of this year, after a strong jump in the previous month, data released on Thursday showed.
New housing starts ticked lower by 2.6 per cent in January from December to an annualised rate of 1.25mln units, the Commerce Department reported. That came on the heels of an 11.3% rise in the previous month.
Meanwhile, permits to build new homes advanced by 4.6% to a rate of 1.29mln units.
Wall Street economists had expected a rate of 1.22mln for starts, and 1.23mln for permits.
Furthermore, the labour market was seen heating up as initial weekly jobless claims came in lower than forecast at 239,000 versus a forecast 245,000. Still, they were higher than last week’s 234,000.
Also, manufacturing was heating up. The influential Philadelphia Fed gauge in February recorded 43.3. It had been forecast at just 18.0 and was double the previous month’s 23.6.
The US has moved near full employment, while inflation is nearing the Federal Reserve’s target, the central bank’s vice chair said on Thursday as he renewed his call for “gradual” rate rises.
Stanley Fischer’s remarks on Bloomberg Television echoed those of his boss, Janet Yellen, the Fed chief who said during two days of grueling Congressional testimony this week that given the improvement in the economy it would be “unwise” to wait too long before tightening policy.
Charter Communications (NASDA:CHTR), the US cable television and internet provider, disclosed on Thursday an increase in quarterly revenues that topped Wall Street estimates.
Revenues boomed by more than four-fold from the previous year to $10.28bn in the fourth quarter, driven by the closing of its deal in May 2016 to buy Time Warner Cable. On a pro forma basis that combines Charter’s results with Time Warner’s in the previous year’s period, sales were up by 7.2%.
Wall Street economists had forecast sales of $10.23bn.
However, Charter shares were down 0.4% at $323.89 pre-market.
It was litigation lane in stocks world - and counter litigation.
Shares in Anthem (NYSE:ANTM) are set to drop at the open because of turmoil over its planned merger with Cigna (NYSE:CI).
The companies had been pursuing a $54bn merger, but Cigna tried to terminate the deal earlier this week after it was opposed by the Justice Department and blocked by a federal judge. What is more, Cigna planned to sue Anthem seeking to claim a $1.85bn break-up fee and additional damages exceeding $13bn.
But Anthem doesn't want to accept the break-up, and is now suing to stop Cigna pulling out. A Delaware court has issued a temporary restraining order that prevents Cigna from withdrawing -- for now.
Cigna shares were down 0.7% at $145.50 pre-market while Anthem shares had not yet traded.
Restaurants and other businesses across the US will be closing their doors Thursday in support of a "Day Without Immigrants," a national grassroots movement seeking to protest US President Donald Trump's immigration reforms.
The protests could hit the restaurant industry especially hard. Foreign-born workers provide the vast majority of labour in the sector. It is unclear how many groups plan to suspend trade.