US close: Healthcare rout sends stocks lower on Wednesday
By Iain Gilbert
Date: Wednesday 17 Apr 2019
(Sharecast News) - US stocks closed lower on Wednesday as investors thumbed over earnings releases from the likes of Morgan Stanley, BNY Mellon and PepsiCo and looked to data that indicated stabilisation of China's economic growth.
At the close, the Dow Jones Industrial Average closed 0.01% lower at 26,449.54, while the S&P 500 traded 0.23% lower at 2,900.45. The Nasdaq closed 0.05% softer 7,996.08, after registering an intraday high of 7,715.07 at the bell.
However, stocks soon took a turn as losses over at healthcare outfits Anthem, Cigna and UnitedHealth weighed on Wall Street following a report from analysts at JPMorgan highlighting "temporary downside risks" to the sector in the form of US Senator Bernie Sanders' most recent medicare proposal.
The Dow closed three points lower on Wednesday as PepsiCo shares fizzed 3.76% higher on Wednesday after the food and beverage company's quarterly earnings and revenue beat analysts' expectations.
Shares in banking giant Morgan Stanley closed 2.68% higher after it posted first-quarter earnings per share of $1.39, down from $1.45 a year ago but ahead of expectations of around $1.17, while Bank of New York Mellon lost 9.52% in the session after releasing its earnings, with profit down 20% from Q1 2018 to $910m.
Netflix slipped 1.31% on the day despite its Q1 numbers beating on the top and bottom lines as disappointing guidance weighed on sentiment.
Neil Wilson, chief market analysts at Markets.com, said: "Two main reasons to be cautious - price hikes are being rolled out across a number of key geographies and this gives management enough reason to be conservative about net new subscriber adds.
"Meanwhile, we should also look at an increasingly competitive space with Disney and Apple recently announcing their own streaming platforms. Further, we should anticipate certain plateaus in the growth cycle."
Elsewhere, IBM was in the red by 4.14% at the end of the session after the technology company's first-quarter revenues fell short of expectations.
Away from earnings, Sino-US trade relations were in focus again as White House economic adviser Larry Kudlow said "very good progress" was being made in talks.
"We like what we see, but I'm not here to make a forecast," he told Fox Business Network when asked about whether he could definitively say a deal would be reached between the two.
Investors in the US were also digesting the latest batch of data out of China overnight, which showed that first-quarter GDP grew at a 6.4% pace, beating estimates for 6.3% and matching the 6.4% seen in the fourth quarter of last year.
Meanwhile, the Lunar New Year slowdown in industrial production in February of 5.3% saw a rebound to an expansion of 8.5% year-on-year, ahead of expectations of 5.9%. In addition, retail sales for March rose 8.7%, up from 8.2%.
On the US macroeconomic calendar, according to the Department of Commerce, the US trade deficit on goods and services shrank in March at a pace of 3.4% month-on-month to reach $49.4bn (consensus: -$53.6bn), amid a pickup in sales of civilian aircraft.
Elsewhere, US wholesale inventories grew less than anticipated in February as sales rose for a second consecutive month.
Commerce revealed that wholesale inventories had climbed 0.2% month-on-month to an all-time high $668.9bn.
Data for January was revised down to show wholesale inventories had advanced just 1.2% instead of the 1.4% originally reported. Wholesale inventories were up 6.9% on a year-on-year.
Elsewhere, America's shortfall on trade with the rest of the world narrowed significantly in February amid a pickup in sales of civilian aircraft.
According to the Department of Commerce, the US trade deficit on goods and services shrank by 3.4% month-on-month to reach $49.4bn.
Total exports increased by 3.1% versus January to reach $209.7bn and imports by 0.2% to $259.1bn.
Goods exports rose by $2.1bn, as sales of civilian aircraft increased by $2.2bn and those of autos and parts by $0.6bn, offset by a decline of $0.4bn in overseas sales of industrial supplies and materials.
Imports of goods meanwhile grew by $0.9bn to $211.6bn, with those of cell phones and other household goods rising by $2.1bn.
The politically sensitive deficit with China meanwhile shrank by $3.1bn to $30.1bn.
Year-to-date, the total trade deficit fell by 7.6% on the month or $8.3bn, as exports jumped by 2.7% or $11.1bn and those of imports by 0.5% or $2.8bn.
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