By Anora Mahmudova and Sara Sjolin, MarketWatch
Producer prices fall in February; Consumer sentiment slides in
March
NEW YORK (MarketWatch)--U.S. stocks suffered sharp losses on
Friday and the main indexes looked set to register steep losses for
a third week in a row, finishing what has turned out to be a
turbulent five-day trading stretch.
Investors grappled with a set of mixed economic reports over the
week, with each data set shifting expectations of the first rate
hike, while heightened volatility amplified moves on Wall
Street.
Friday's producer prices report showed a surprise drop,
indicating persisting deflationary pressures. Meanwhile, consumer
sentiment slid in March, falling more than experts had
forecast.
Delivering another dollop of worry to the dour mood on the
Street was renewed selling in oil prices triggered by a report
pointing to heightened production.
The S&P 500 (SPX) saw broad-based losses, with all 10 main
sectors trading lower.
The Dow Jones Industrial Average (DJI) dropped more than 200
points, with all of its 30 members trading lower.
The Nasdaq Composite (RIXF) also fell.
"Volatility in the stock market rose since the end of tapering
last October, which we see as the first de facto tightening," said
Daniel Skelly, lead portfolio manager at Morgan Stanley Wealth
Management. "While we still see modest returns this year,
likelihood of more choppy trades is high."
Skelly noted that mixed economic picture, especially lack of
wage growth, overall slack in the labor market and the fragile
state of the rest of the world economy provide enough reasons for
the Federal Reserve to be hesitant with an interest-rate increase
this year. Regardless, Skelly thinks market reaction to the
eventual hike will be measured.
The Federal Open Market Committee meets on Tuesday and
Wednesday, and although no rate changes are expected, investors
will closely be watching Chairwoman Janet Yellen's news conference
for hints on how patient the central bank will be before tightening
its monetary policy.
Eric Wiegand, senior portfolio manager at U.S. Bank Wealth
Management, said the Federal Reserve will probably remove the word
"patient" from the statement but is likely to have a very moderate
wording to soothe the market in light of falling inflation and
overseas developments.
Friday's data: The University of Michigan's consumer sentiment
index dropped to its lowest level since November.
Separately, despite the first rise in gasoline costs since last
summer, U.S. producer prices fell in February for a fourth straight
month, mainly because of a sharp drop in volatile category of
retail trade margins.
Earnings: Clothing retailer Ann Inc.(ANN) delivered a surprise
fiscal fourth-quarter profit, as both total sales and same-store
sales beat expectations. Shares jumped 8%.
Movers and shakers: Shares of Aéropostale Inc.(ARO) dived 14%
after the apparel retailer said it forecast a larger-than-expected
loss in the first quarter.
FXCM Inc.(FXCM) surged 26% after the foreign-exchange broker's
fourth-quarter earnings released on Thursday topped consensus
estimates
(http://www.marketwatch.com/story/fxcms-stock-rallies-after-better-than-expected-profit-sales-2015-03-12).
Herbalife Ltd.(HLF) jumped 8% after a Wall Street Journal report
that federal investigators were interviewing people connected to
hedge-fund billionaire Bill Ackman in a possible stock-manipulation
probe
(http://www.marketwatch.com/story/ackmans-people-interviewed-in-potential-herbalife-manipulation-probe-2015-03-12).
eBay Inc.(EBAY) picked up 1.1% ahead of the bell after
Susquehanna Financial upgraded the company to positive from
neutral.
Other markets: In Asia, the Nikkei Average jumped above 19,000
for the first time since April 2000
(http://www.marketwatch.com/storyno-meta-for-guid). European
markets were mixed, while the U.K.'s FTSE 100 index moved between
gains and losses
(http://www.marketwatch.com/storyno-meta-for-guid), hit by utility
shares.
Crude oil accelerated losses after the International Energy
Agency said the recovery for oil prices remains fragile
(http://www.marketwatch.com/story/iea-oil-price-recovery-still-fragile-2015-03-13)
amid a production rebound in the U.S. and brimming inventories.
Most metals rose, while the ICE dollar index (DXY) climbed above
100, for the first time since March 2003.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires