Stocks fall, manufacturing data on tap

U.S. stocks wavered Wednesday during midday trading to start March as key manufacturing data offered mixed results and two Federal Reserve officials suggested a more aggressive rate-hiking campaign in the coming months.

The S&P 500 (^GSPC) neared the flatline around noon. The Dow Jones Industrial Average (^DJI) edged up 0.2%. Contracts on the technology-heavy Nasdaq Composite (^IXIC) fell by 0.1%.

The yield on the benchmark 10-year U.S. Treasury note moved upward and briefly touched 4% midday Wednesday. Crude oil traded weaker, with U.S. benchmark WTI down at $76.91 a barrel.

On the economic data side, U.S. manufacturing firms signaled a grim outlook for the sector, according to the latest PMI data from S&P Global. The seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index was revised lower to 47.3 in February, up from 46.9 in January. The reading indicates “a solid deterioration in the health of the goods-producing sector, despite the pace of decline softening to the slowest for three months.”

Separately, economic activity in the manufacturing sector diminished in February for the fourth consecutive month following a 28-month period of growth, according to the Institute for Supply Management report on business. The data offered a mixed bag. Employment in manufacturing decreased to 49.10 in February from 50.60 in January. New orders rose to 47.0 compared to January’s figure of 42.5. Prices paid jumped to 51.3 from January’s reading of 44.5.

Stocks fell Tuesday, rounding out the last day of a volatile month of February on Wall Street. According to JP Morgan’s trading desk, February’s month-end rebalance drove some weakness in equities and strength in bonds Tuesday afternoon. In addition, Goldman Sachs’ (GS) investor day featured a 3.8% selloff for the stock as the bank considers alternatives for its struggling consumer platforms business.

“After the recent strategic missteps, this update is clearly more evolution than revolution,” JPM financial sector specialist James Goulbourne wrote in a note on Tuesday, “with profitability in the ancillary Platform Solutions business, rather than deeper expense cuts in core business (what the market really wanted), combined with declining balance sheet exposure expected to drive returns higher.”

With February in the rearview, the S&P 500 is now up 3.4% this year, according to data from Bespoke Investment Group. Mega-caps have been a massive driver of the index moves. That said, 20 of the largest stocks in the S&P 500 have accounted for most of the index’s gains.

Now, as the calendar turns, March historically sees the S&P 500’s gains in the second half of the month, Bespoke Investment Group noted.

The path of the Federal Reserve’s rate hikes remains in focus for investors. Two Federal Reserve officials spoke on Wednesday leaned in the move that aggressive interest rate hikes are the path forward to ease inflation.

In his first public speech since taking office last month, Chicago Fed President Austan Goolsbee said on Tuesday it would be a “danger and a mistake for policy makers to rely too heavily on market reactions” and emphasized the importance to “supplement these traditional data with observations on the ground from the real economy.”

However, Goolsbee, who will be a voter at this year’s policy-setting Federal Open Market Committee meeting, didn’t comment on monetary policy.

Since last year, the Fed has sharply raised rates in an effort to cool inflation. But inflation remains sticky. Policymakers will be releasing new projections after the central bank’s March 21-22 meeting.

Austan Goolsbee, Professor of the University of Chicago, speaks during the Obama Foundation

Austan Goolsbee. REUTERS/Brendan McDermid

On the housing front, mortgage rates are moving upward, pushing buyers to the sidelines as the spring housing market is underway. Both purchase and refinance applications slumped last week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume of purchase applications hit a 28-year low, down 44% from a year ago.

Here are some of the tickers trending on Yahoo Finance today:

  • Eli Lilly and Company (LLY): The drugmaker announced Wednesday morning it expects to cap out-of-pocket cost of its insulin at $35 a month. The plan comes as a promise to provide critical relief to some people with diabetes, who at times face higher medical costs.

  • Kohl’s (KSS): Shares of the retail giant declined nearly 3% Wednesday after the company posted a surprise fourth quarter loss and sales slumped as consumer habits shift away from discretionary spending.

  • Wendy’s (WEN): The fast-food chain announced in its quarterly earnings about its plans to target sales growth through 2025 as it streamlines costs.

  • Rivian (RIVN): The electric truck manufacturer’s guidance for fiscal 2023 deliveries came in 20% below estimates as the EV maker struggles to scale up its truck, van, and SUV production.

  • Nio (NIO): Another EV maker gave weak revenue guidance, the Chinese premium EV startup, reported a much worse-than-expected fourth quarter loss as margins took a hit due to in part the “losses on purchase commitments.”

  • Novavax (NVAX): The vaccine maker warned of its ability to stay in business through next year. This comes as the company has struggled to develop and enter the COVID-19 vaccine market.

  • Alibaba (BABA): The stock climbed in the wake of the group’s quarterly earnings, and fueled by the 4% surge in the Hang Seng index overnight.

  • Dollar Tree (DLTR): The discount retailer stock rose nearly 2% after the company posted weaker guidance for the current fiscal year.

  • Tesla (TSLA): The EV maker is set to kickoff its first Investor Day event on Wednesday from its gigafactory in Austin, Texas. CEO Elon Musk is expected to announce new Tesla products that aim to reduce reliance on fossil fuels and lead to a “fully sustainable energy future.”

  • HP (HPQ): The PC and printing giant’s stock wavered after the company posted mix results amid a soft demand environment for personal computers. Fiscal-quarter sales dropped 18% year-over-year. Printer sales sank 5% from a year ago.

  • Lowe’s (LOW): The home-improvement company reported weaker fiscal sales in the fourth quarter and issued a conservative outlook ahead, with comparable sales expected to be flat to down 2% compared to the prior year.

Other earnings on tap Wednesday after the bell include Salesforce (CRM), Snowflake (SNOW), and Okta (OKTA).

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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