Stocks close mostly lower as weak industrials sector offsets tech rally

Stocks close mostly lower as weak industrials sector offsets tech rally

3M drags on the Dow

U.S. stocks closed mostly lower Thursday as manufacturing-related sectors logged big losses, offsetting a rally in social-media shares. A double-digit decline in 3M Co.’s stock following disappointing earnings also weighed on the blue-chip Dow.

How did benchmarks fare?

The Dow Jones Industrial Average DJIA, +0.10% bounced off earlier lows but still fell 134.97 points, or 0.5%, to 26,462.08. The S&P 500 index SPX, +0.16% shed 1.08 points to 2,926.17, with industrials and materials sectors leading the decline while the tech-centric Nasdaq Composite COMP, -0.10% rose 16.67 points, or 0.2%, to 8,118.68.

What drove the market?

Guidance from U.S. companies on the state of the economy and the business climate helped to underpin a mostly steady advance for equity markets so far this week, but mounting signs of economic weakness from Europe to Australia have cast a shadow over markets.

Major global exporter South Korea was one of the most recent indicators of a pullback in expansion as the Asian country’s first-quarter gross domestic product shrank by 0.3%, marking its worst performance in more than a decade. The data came a day after a reading of consumer prices in Australia remained flat in the first quarter, increasing expectations for a rate cut from the Reserve Bank of Australia.

The spate of weakness has prompted central banks, including the Reserve Bank of Australia, the Bank of Canada and the Bank of Japan, to adopt more dovish stances, which has, in turn, pushed the U.S. dollar to a roughly two-year high.

In the U.S., a parade of earnings rolled on, with 3M MMM, +0.49% , notably, driving early market action after the diversified industrial giant slashed its full-year 2019 guidance and said it would cut 2,000 jobs. 3M’s stock skidded 13%.

The number of Americans who applied for first-time jobless benefits surged to 230,000 in the week ended April 20, up from 193,000 during the previous week, and above the 201,000 expected by economists polled by MarketWatch.

Orders for durable goods rose by 2.7% in March, the largest one-month increase since last summer, the Commerce Department said.

A key measure of business investment, core durable orders, rose 1.3% in March, the third straight monthly increase.

National vacancy rates for rental homes remained steady at 7% in the first quarter of 2019, compared with the previous three months, while vacancy rates for homeowner housing fell 0.1%, according to the Commerce Department.

What were strategists saying?

“It’s been a solid week for earnings, but with expectations being so low, companies that beat earnings aren’t being rewarded as much as companies that miss forecasts are getting smacked,” said J.J. Kinahan, chief market strategist at TD Ameritrade.

The market is in an uptrend with its bullish patterns intact, said Frank Cappelleri, a strategist at Instinet LLC. “Over the last week not much has changed: The market continues to rally — little by little — taking a cue from positive market happenings and ignoring the negative headlines.”

What stocks were in focus?

Facebook Inc. FB, -0.70% shares gained 5.9% after the social-media company reported revenue and profit that topped Wall Street estimates. However, Facebook did set aside some $3 billion for a potential regulatory fine related to its handling of client data.

Shares of Microsoft Corp. MSFT, +0.29%  rose 3.3% on solid fiscal third-quarter results, helping the company join the $1 trillion market-cap club.

Tesla Inc. TSLA, -2.58%  fell 4.3% after the electric-car maker produced a wider-than-expected quarterly loss.

Shares of Xilinix Inc. XLNX, +0.51% slumped 17% after the chip maker beat lowered expectations for fiscal fourth-quarter earnings and revenue. The stock has risen 64% year-to-date.

Southwest Airlines Co. LUV, +0.04%  rose 0.8% after the air carrier reported first-quarter earnings that beat expectations and the company raised its unit costs outlook.

Shares of Altria Group Inc. MO, +2.25%  retreated 6% after its first-quarter report.

Comcast Corp. CMCSA, +0.83% climbed 2.6% after the media company reported first-quarter earnings that topped estimates but fell short of revenue expectations.

Hershey Co.’s stock HSY, +1.80% rose 4.6% after the chocolate-and-snacks company reported first-quarter results that exceeded Wall Street estimates for profit and revenue.

United Parcel Service Inc. UPS, -1.43%  shares skidded 8.1% after the delivery company reported quarterly results that disappointed Wall Street on earnings and revenue.

How did other markets perform?

The Shanghai Composite SHCOMP, -1.20%  lost 2.2% and the CSI 300 Index000300, -1.33%  gave up 2.2%, while the Stoxx Europe 600 index SXXP, +0.17%was down 0.2%.

Gold prices GCM9, +0.82% settled slightly higher while the ICE Dollar IndexDXY, -0.21% was generally flat.

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