Yet Another Sign of a Weakening Economy Spooks Investors Weak construction spending data undermines confidence in economy and stocks.
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The S&P 500 index, up more than half a percent this morning, closed the day down 0.39 percent, while the Dow and Nasdaq Composite indexes declined by 0.79 percent and 023 percent respectively. The BIZ Experiences Index™ closed the day down 0.17 percent.
Construction spending in December fell 0.6 percent, according to data released this morning by the Commerce Department. Consensus estimates were for a 0.2 percent increase. The data point is just the latest indicator that the U.S. economy may be slowing more sharply than expected. The weak numbers overshadowed early morning optimism over the U.S.-China trade negotiations. The two sides are reportedly discussing a possible end-of month meeting between President Trump and President Xi Jinping to sign an agreement.
Retailers Gap Inc. and Bed Bath & Beyond had the two biggest declines on the BIZ Experiences Index™ today. Shares in the Gap were down 6.0 percent after soaring more than 16 percent on Friday. The company reported weak financial results after the Thursday market close but also announced a plan to split off its Old Navy brand from Gap and Banana Republic, leading to the surge in the stock price. Investors appear to now doubt that the Gap's parts are worth much more than the whole.
Bed Bath and Beyond, meanwhile, got a thumbs down from Barclays' analysts who downgraded the stock to underweight and set a price target of $13 per share. The stock currently trades at $15.80, down 5.33 percent on the day. The analysts expressed disappointment with the results of the company's turnaround efforts. The stock is up 39.6 percent this year, but is still down 27.6 percent over the last twelve months.
Investor sentiment has turned decidedly sour on Tesla. The growing concerns about an exodus of senior executives from the company in the last two years and worries about the car-maker's ability to ramp up vehicle production profitably have hurt the stock price lately. The ongoing twitter-fueled war between CEO Elon Musk and the SEC hasn't helped either. The stock fell 3.2 percent today and is down nearly 25 percent since the middle of December.
The technology sector was volatile today. Facebook had the biggest gain in the sector and on the BIZ Experiences Index™, rising 3.14 percent. Software-maker salesforce.com, which reported earnings after the market close, had the biggest decline, falling 3.66 percent. It was down further in after-hours trading. Other losses in the sector today included Adobe Systems Inc. (-2.22 percent), Verisign (-2.04 percent) and Netflix (-1.76 percent).
D.R. Horton Inc. had the second biggest gain on the BIZ Experiences Index™ today, rising 3.12 percent. Shares in the country's largest homebuilder have been volatile over the last six months as falling home sales and housing starts have buffeted the real estate market. The shares are up 15.4 percent so far this year but are still down 14 percent since late August.
Trade talk optimism lifted shares in Brown-Forman Corp. The stock was up 2.31 percent today as negotiations between China and the U.S. toward a trade deal continue to progress. The maker of Jack Daniels is a favorite U.S. corporate target for retaliatory tariffs in trade disputes.
Other gains on the BIZ Experiences Index™ today included REIT SL Green Realty Corp. (1.45 percent), pest-control company Rollins Inc. (1.31 percent) and Chipotle Mexican Grill (1.18 percent).
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