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Stocks - Dow Downed by Falling Energy Stocks

Published 03/06/2019, 04:04 PM
Updated 03/06/2019, 05:16 PM
© Reuters.

Investing.com - The Dow fell for the third-straight day Wednesday as energy stocks were led lower by falling oil prices and a slump in shares of Chesapeake Energy amid concerns about valuation.

The Dow Jones Industrial Average fell 0.52%, the S&P 500 lost 0.65%, while the Nasdaq Composite slumped 0.93%.

Energy stocks fell 1.3%, pressuring the broader market after oil prices slid following a report from the Energy Information Administration showing a larger-than-expected build in crude stockpiles.

Chesapeake Energy (NYSE:CHK) also played a role in the selloff, falling 4% after analyst John Gerdes at MKM Partners flagged valuation concerns, highlighting that the stock trades at an "almost 20% premium" to its peers.

Industrials, meanwhile, were dragged down by General Electric (NYSE:GE) for the second-straight day as Wall Street remained bearish on the conglomerate following CEO Larry Culp's downbeat update on Tuesday.

JPMorgan (NYSE:JPM) analyst Stephen Tusa, a frequent GE critic, said his $6 price target on GE -- a third lower than Wednesday's close -- looked "generous," given the headwinds the company will face over the next two years, according to CNBC.

"As long as this sentiment prevails, we don't think the stock can bottom," Tusa added.

Culp said Tuesday free cash flow from the company's industrial segment is likely to remain negative this year amid ongoing struggles in its power business.

The Fed's Beige Book report, meanwhile, did little to help sentiment as it noted the recent government shutdown weighed on economic activity in "some areas."

The winless streak for the broader market comes as investors await an update on U.S. and China trade talks amid ongoing concerns over a slowdown in global growth.

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The Organization for Economic Co-Operation & Development (OECD) said it expects the global economy to grow by 3.3% in 2019 and 3.4% in 2020, down from its November 2018 forecast of 3.5% for both years.

In tech, semiconductors slipped, led by Micron Technology (NASDAQ:MU) after Cleveland Research lowered its revenue estimates for the chipmaker on concerns about increased pricing headwinds, inventory risk and soft demand. Micron was off 5.2% in regular trading.

The Philadelphia Semiconductor Index lost 1.7% on the day but remains up about 16% for the year.

On the corporate earnings front, Dollar Tree (NASDAQ:DLTR) reported better-than-expected fourth-quarter results, beating estimates from Investing.com on both the top and bottom lines. The discount retailer also outlined plans to close 390 Family Dollar stores this year, and renovate 1,000 other locations in a bid to boost profits.

In economic news, private payrolls grew by 183,000 for the month, a sharp decline from the upwardly revised 300,000 in January, missing economists' forecasts of 189,000.

The ADP report is a precursor to the Labor Department's non-farm payrolls report due Friday. Economists expect the U.S. economy generated 180,000 jobs last month, down from 304,000 jobs added in January.

Top S&P 500 Gainers and Losers Today:

LyondellBasell Industries (NYSE:LYB), Dollar Tree (NASDAQ:DLTR) and Aon (NYSE:AON) were among the top S&P 500 gainers for the session.

General Electric (NYSE:GE), Willis Towers Watson (NASDAQ:WLTW) and Westinghouse Air Brake (NYSE:WAB) were among the worst S&P 500 performers of the session.

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