The S&P 500 and the Dow surrendered early gains to turn lower Wednesday as energy stocks deepened losses. However, Nasdaq maintained a foothold in positive territory on a modest recovery in technology stocks.
Meanwhile, investors are taking President Donald Trump’s warning of a potential government shutdown in stride, with the remarks having little impact on the market.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.03% slid 1.9 points to 24,178 and the S&P 500 SPX, -0.03% shed 0.6 point to 2,628. The Nasdaq Composite Index COMP, +0.00% is managing to defend its gains so far, rising 2 points to 6,764.
Energy shares were among the biggest decliners of the day, with the sector falling 1.1% alongside a 2.4% drop in the price of crude oil. On the upside, technology shares rose 0.5%. The group has been struggling recently, and is down 1.8% thus far in December. FacebookFB, +1.20% rose 1.3%.
Both the S&P and the Nasdaq have declined for three straight sessions. If the S&P were to close down for a fourth straight day, that would represent its longest streak of daily declines since March. A fourth straight daily drop for the Nasdaq would be its longest since November 2016.
Tech-heavy benchmarks such as the Nasdaq Composite, down over 1% for the week, have seen the most selling in recent sessions, with analysts blaming profit-taking after big gains in large-capitalization tech stocks, as well as worries over the possible retention of a corporate alternative minimum tax as the U.S. overhauls its tax system. Keeping the corporate AMT could hit tech companies harder than others.
See: Here’s how violent the stock-market rotation out of tech has been
Read more:Risks ‘high and rising’ for big drop in stocks, bonds, says government watchdog
What could move markets?
The retention of the corporate alternative minimum tax in the Senate version of the Republicans’ tax bill has been seen as a factor in tech-stock selling. The House’s bill repealed the corporate AMT, but in a last-minute switch before passing its bill early Saturday morning, the Senate decided to keep the provision.
Read:Here’s why the corporate AMT is a hurdle to a final tax bill
On the data front, private-sector employers added 190,000 jobs in November, which was above expectations but below the rate added in October.
Separately, the increase in productivity of American firms and workers was unchanged at 3% in the third quarter under the government’s first do-over of its original report.
What are strategists saying?
“People are becoming a little more risk averse with the march up in technology. While these are great companies, a stock like AmazonAMZN, +0.32% isn’t cheap. They’ve had a huge run, and they’ll need a pause to refresh a bit, which could be 10-15%, or even 25% in some names,” said Chris Bertelsen, chief investment officer at Aviance Capital Management, LLC.
“However, it isn’t the end of the world. We haven’t had a drawdown in a long time, so one could happen at any time, especially given the confluence of global political risk, and the fact that valuations aren’t totally out of control, they are on the high side.”
Regarding the possibility of a government shutdown, Bruce Bittles, chief investment strategist at Baird, played down the impact of the news on stocks.
“Market is not down very much so difficult to believe shutdown is involved. It is also old news, nothing really new,” he said.
Federal government operations are funded through Friday, and would partially shut down if there’s no deal by politicians to extend funding.
Which stocks are on the move?
Shares in Google parent Alphabet Inc.GOOG, +1.25%GOOGL, +1.29% rose 1.3% while Amazon was up 0.5%. Earlier, it was reported that Google had pulled YouTube from Amazon streaming devices.
American Eagle Outfitters Inc.AEO, +1.12% rose 0.6% after it reported third-quarter same-store sales that came in above analyst forecasts.
Jack Daniel’s whiskey parent Brown-Forman Corp.BF.B, +4.83% rose 5% after it reported its quarterly results.
United Parcel Service Inc.UPS, -1.35% fell 1.7% after the shipping giant warned about delivery delays.
UnitedHealth Group Inc.UNH, -0.44% said it would buy DaVita Inc.’s DVA, +0.10% physician group for about $4.9 billion in cash. Shares of DaVita jumped 12% while UnitedHealth dropped 0.3%.
What are other assets doing?
European stocksSXXP, -0.11% dropped for a second day in a row, while falls for tech and mining shares drove losses across Asia marketsADOW, -1.18%
The ICE U.S. Dollar Index DXY, +0.31% edged higher, while gold futuresGCG8, +0.09% were rallying from a four-month low and oil futures CLF8, -2.36% fell.
Bitcoin BTCUSD, +8.05% moved further above $12,000 Wednesday, last trading around $12,691.
Additional reporting by Barbara Kollmeyer and Victor Reklaitis
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