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Wall Street drops after weak data, healthcare slump

Stock MarketsMar 04, 2019 04:30PM ET
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© Reuters. Traders work on the floor of the NYSE in New York

By Lewis Krauskopf

(Reuters) - Wall Street's major indexes fell on Monday, weighed down by a weak U.S. construction spending report and declines in healthcare shares, as an initial rally on optimism over a U.S.-China trade deal faded.

U.S. construction spending unexpectedly fell in December as investment in both private and public projects dropped, leading economists to expect that the government will trim its economic growth estimate for the fourth quarter.

Before turning negative, stocks had climbed following a report that U.S. President Donald Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit around March 27.

Optimism over the world's two largest economies reaching a trade truce already has been a significant factor fuelling the market's rally since late December, along with investors' belief that the Federal Reserve will not be aggressive in raising interest rates. The S&P 500 remains up more than 11 percent in 2019.

"There has been a pricing in of this expectation throughout the early months of 2019, which is partly why you have had such a bullish market,” said Alicia Levine, chief strategist at BNY Mellon Investment Management in New York.

"The market expects a trade deal with China, so there is a little bit of sell on the news here," added Levine, who said stocks ultimately could still move higher on a trade deal.

The Dow Jones Industrial Average fell 206.67 points, or 0.79 percent, to 25,819.65, the S&P 500 lost 10.88 points, or 0.39 percent, to 2,792.81 and the Nasdaq Composite dropped 17.79 points, or 0.23 percent, to 7,577.57.

Levine and other market watchers also pointed to the 2,800 level for the S&P 500 as a key technical level. The benchmark index rose as high as 2,816.88 during the session.

“You’d have to point the finger (for the market's drop) at the China trade negotiations and the fact that we hit technical resistance again at 2,800 on the S&P 500,” said Bucky Hellwig, senior vice president at BB&T (NYSE:BBT) Wealth Management in Birmingham, Alabama.

Healthcare, which has underperformed this year, was the biggest declining major S&P 500 sector, sinking 1.3 percent. Shares of UnitedHealth Group (NYSE:UNH) fell 4.1 percent, weighing on the Dow, while shares of other health insurers also fell sharply.

In healthcare news, Reuters reported that OxyContin maker Purdue Pharma LP is exploring filing for bankruptcy to address potentially significant liabilities from lawsuits alleging the company contributed to the opioid crisis, sending shares of some publicly-traded sellers of opioid pain treatments lower.

Still, indexes finished above their session lows. Materials rose 0.44 percent, the most among the S&P 500 sectors.

In corporate news, AT&T (NYSE:T) shares fell 2.7 percent as the company is restructuring its WarnerMedia business, according to a memo sent to employees on Monday and seen by Reuters.

Declining issues outnumbered advancing ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.62-to-1 ratio favored decliners.

The S&P 500 posted 40 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 83 new highs and 32 new lows.

About 7.9 billion shares changed hands in U.S. exchanges, above the 7.3 billion daily average over the last 20 sessions.

(additional reporting by Medha Singh and Amy Caren Daniel in Bengaluru; editing by Arun Koyyur, Jonathan Oatis and Bill Berkrot)

Wall Street drops after weak data, healthcare slump
 

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Comments (10)
Scott Faries
Scott Faries Mar 05, 2019 3:11AM ET
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I think there was a bit of profit taking
Gabe Domen
Gabe Domen Mar 04, 2019 4:23PM ET
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Like Cramer use to say :they know nothing.
Danilo fffffff
Danilo fffffff Mar 04, 2019 3:43PM ET
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my gosh... they always put a excuse for the drop or for the rise... NOBODY KNOWS WHY IT FELT...
Mike Roddy
Mike Roddy Mar 04, 2019 3:01PM ET
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Technically, we entered a recession with the last GPD reading, 3 consecutive declines and it looks like a 4th decline is coming, the artificial stimulus of the tax cuts is wearing pretty thin.
Sam Mojtabai
Sam Mojtabai Mar 04, 2019 3:01PM ET
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Spot on sir
Steven Boyd
Steven Boyd Mar 04, 2019 2:29PM ET
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This week is starting the same as the previous two weeks. Initially goes up on Monday and declines most of the week and then recovers. I forsee the same thing this week.
Andrew Davis
Andrew Davis Mar 04, 2019 1:50PM ET
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There's been lower earnings and the SPX has still risen despite a slowdown in US data time for a small correction methinks.
Christoph Willywonka
Christoph Willywonka Mar 04, 2019 11:32AM ET
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the reality of slowing economy is coming to play. January and February numbers will continue to lead to drops. no trade news of value will come for weeks is all. hope will only burn speculators
Jack Zhang
Jack_A Mar 04, 2019 10:23AM ET
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so tired of this kind of 'hope'
Ishminder Singh
Ishminder Singh Mar 04, 2019 9:14AM ET
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market will close deep down today atleat 150 points dow jones
Bobster Bambino
Bobster Bambino Mar 04, 2019 8:41AM ET
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I dont think anything has changed over the weekend. Market could be up for other reasons
rukhsana ebrahim
rukhsana ebrahim Mar 04, 2019 8:41AM ET
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Ishminder Singh  does anyone know the reason for the fall of Dow?
 
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