Stock Market Update

[BRIEFING.COM] The stock market logged sharp declines in a broad-based retreat on above-average volume on this options expiration day. The major indices all settled near their worst levels of the day, which left the S&P 500 just above its 50-day moving average (6,010) with a 1.7% loss.

Concerns over growth and valuations drove consolidation activity and profit-taking interest. The concerns over growth followed soft economic data this morning, including the preliminary February S&P Global US Services PMI, which fell to contraction territory (i.e. below 50), the final University of Michigan Consumer Sentiment report for February, which dropped to 64.7, and existing home sales, which declined 4.9% month-over-month in January.

The worries about valuation have been growing this week, sparking discussions about the possibility of the market having reached a near-term peak. 

Fallout in shares of UnitedHealth (UNH 466.42, -36.00, -7.2%) following a Wall Street Journal report that the DOJ has launched a civil fraud investigation into UNH's Medicare Advantage billing practices also weighed on the market, particularly the Dow Jones Industrial Average (-1.7%).

Four of the S&P 500 sectors declined at least 2.0% including the consumer discretionary (-2.8%) and technology (-2.5%) sectors. 

Treasuries settled with gains across the curve in response to this morning's economic data. The 10-yr yield dropped eight basis points to 4.42% and the 2-yr yield settled eight basis points lower at 4.19%.

• Dow Jones Industrial Average: +2.1% YTD
• S&P 500: +2.2% YTD
• Nasdaq Composite: +1.1%
• S&P Midcap 400: -0.6% YTD
• Russell 2000: -1.6% YTD

Reviewing today's economic data:

• February S&P Global US Manufacturing PMI - Prelim 51.6; Prior 51.2
• February S&P Global US Services PMI - Prelim 49.7; Prior 52.9
• January Existing Home Sales 4.08 mln (Briefing.com consensus 4.06 mln); Prior was revised to 4.29 mln from 4.24 mln
  • The key takeaway from the report is that existing home sales are being suppressed by affordability constraints that are rooted in elevated home prices, which are tied to limited inventory, and elevated mortgage rates.
• February Univ. of Michigan Consumer Sentiment - Final 64.7 (Briefing.com consensus 67.8); Prior 67.8
  • The key takeaway from the report is that the weakening in sentiment cut across groups by age, income, and wealth, and was attributed largely to worries about imminent price increases driven by tariff actions.

Looking ahead, there's no US economic data of note on Monday.