Stocks Slip as Consumer Staples Weigh
September 07 2016 - 2:42PM
Dow Jones News
U.S. stocks slipped Wednesday, as declines in shares of grocery
chains helped drag down the consumer staples sector.
The Dow Jones Industrial Average fell 48 points, or 0.3%, to
18490. The S&P 500 lost 0.3% and the Nasdaq Composite slipped
0.2%.
Consumer staples in the S&P 500 fell 1%. Whole Foods lost
5.4% and Kroger slipped 4.4% after Sprouts Farmers Market cut
earnings expectations, raising concerns about the impact of falling
food prices on the chains' earnings. Sprouts shares fell 13%.
Recent lackluster economic data has investors betting the
Federal Reserve is unlikely to nudge up interest rates in
September. The Institute for Supply Management's nonmanufacturing
index fell to its lowest level in 6½ years, according to figures
released Tuesday, and recent employment figures disappointed.
"In order for the market to move to discernible new highs we
need to see growth," said Eric Wiegand, senior portfolio manager at
U.S. Bank's Private Client Reserve.
The yield on the benchmark 10-year Treasury note fell to 1.541%
Wednesday, according to Tradeweb. The yield was 1.544% Tuesday.
Yields fall as prices rise.
Energy shares in the S&P 500 rose 0.1%, led by a 6.9%
advance from Apache, which said it has discovered what may become
one of the biggest energy finds of the past decade in west
Texas.
Shares of Chipotle Mexican Grill gained 4.8% after activist
investor William Ackman's Pershing Square Capital Management
disclosed a 9.9% stake in the burrito chain, making it the
second-biggest holder of Chipotle stock.
The moves came one day ahead of European Central Bank's policy
meeting. Officials are set to release a new raft of economic
forecasts, which will provide markets with further clues on how
much stimulus the ECB is likely to deliver in the future.
"There's every indication they should ease further, but no
indication they will at this point," said Megan Greene, chief
economist at Manulife Asset Management.
Some analysts believe policy makers could address concerns that
the ECB's bond-buying program is set to run out of assets to buy
because of the central bank's self-imposed rules. This could
include dropping some of the rules or announcing an extension of
the program beyond its current end-date of March 2017, which would
give further reason for investors to keep buying sovereign
bonds.
Other analysts argue it is too soon for the ECB to radically
revise either its projections or its policies.
The Stoxx Europe 600 index rose 0.3%. Oil and gas companies were
among the biggest gainers, boosted by rising crude prices. U.S. oil
rose 1.3% to $45.42 a barrel.
Asian stocks closed weaker, led by a 0.4% fall in the Nikkei
Stock Average as the dollar lost 0.2% against the yen. A stronger
currency is a hurdle for Japan's export-dependent
multinationals.
Sonja Laud, fund manager at Baring Asset Management, said are
set to keep flowing out of advanced countries.
"[Emerging-market] local bonds and in some cases equities is
definitely something we've been moving into. Another area is high
yield," she said.
The MSCI Emerging Markets equity index rose 2.6% in dollar terms
Tuesday, the biggest jump since March.
Policy is now a major driver of markets ahead of a politically
charged calendar, including the U.S. elections in November and a
referendum on constitutional reform in Italy, probably during the
same month.
While central banks' easy-money policies are supporting the
rally in bonds and emerging-market assets, many investors see
policy makers shifting toward new fiscal reforms. Depending on its
success in boosting economic growth in developed nations, it could
cap the gains in bonds and emerging markets.
"This is a radical departure from the austerity dominance we've
seen since 2008 and this departure will put a floor under interest
rates," said Marie-Owens Thomsen, chief economist at Indosuez
Wealth Management.
Write to Aaron Kuriloff at aaron.kuriloff@wsj.com and Jon
Sindreu at jon.sindreu@wsj.com
(END) Dow Jones Newswires
September 07, 2016 14:27 ET (18:27 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Chipotle Mexican Grill (NYSE:CMG)
Historical Stock Chart
From Aug 2024 to Sep 2024
Chipotle Mexican Grill (NYSE:CMG)
Historical Stock Chart
From Sep 2023 to Sep 2024