Why Are the S&P 500, NASDAQ, and Dow Weaker?
After starting the week on a weaker note by falling on Monday, the S&P 500 continued to decline and closed at the lowest level since February 28. It’s the first two-day losing streak for the S&P 500 since the end of January.
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Lower risk appetite
Weakness in stocks related to the energy, telecom services, and pharma sectors weighed on the broader index. The risk appetite in the market fell when President Trump accused President Obama of wiretapping him in October 2016 during the election campaign. Also, the market has been expecting an interest rate hike by the Fed in the March meeting. The lower risk appetite is moving markets away from the highs due to President Trump’s comments on tax reforms and infrastructural spending.
On the economic data front, according to data released by the U.S. Bureau of Economic Analysis, the US trade deficit rose to $48.5 billion in January—the highest level in almost five years. Frontier Communications (FTR), Endo International (ENDP), and Southwestern Energy (SWN) were the top losers of the S&P 500 on March 7.
The S&P 500 started March 6 on a weaker note and maintained the weakness throughout the day. The S&P 500 VIX Index (CBOE Volatility Index) measures uncertainty in the market. On March 7, it rose 1.9% to 11.45. It’s measured on a scale of 1–100 with 20 as the historical average. It’s also called the “fear index.” Generally, it moves opposite to stocks’ movements—it falls when the S&P 500 rises.
After a brief pullback on Monday, the NASDAQ Composite Index moved higher on Tuesday. However, it pulled back due to a lack of strength and fell Thursday. The NASDAQ Composite Index fell 0.26% on March 7 and closed the day at 5,833.93. The Dow Jones Industrial Average stayed below 21,000. It closed at 20,924.76—a fall of 0.14% or 29.58 points. The SPDR S&P 500 ETF (SPY) fell 0.3% on March 7.