Dow Jones Industrial Average drops, pressured by Boeing

dow jones

From Emily McCormick:

U.S. stocks were mixed by the end of Tuesday’s session, with the Dow in the red as declines in shares of Boeing pressured the index.

The S&P 500 (^GSPC) rose 0.3%, or 8.22 points, as of market close. The Dow (^DJI) fell 0.38%, or 96.22 points, while the Nasdaq (^IXIC) rose 0.44%, or 32.97 points.

Market participants on Tuesday received a print on the Bureau of Labor Statistic’s Consumer Price Index for February. The headline figure rose 0.2% month-on-month, as expected, and 1.5% year-on-year. CPI excluding the volatile categories of food and energy – considered by many to be a strong indicator of underlying inflation – rose 2.1% year-over-year, slower than the 2.2% pace anticipated. Declines in prices for automobiles and prescription drugs helped drive the decrease in core CPI.

“With headline CPI inflation edging down to a two-and-a-half-year low of 1.5% in February, from 1.6%, and core inflation dropping to a four-month low of 2.1%, from 2.2%, the Fed would appear to be justified in supporting the real economy by being patient and leaving interest rates on hold for a potentially extended period,” Paul Ashworth, chief US economist for Capital Economics, wrote in a note Tuesday.

Average hourly earnings adjusted for consumer prices rose 1.9% in February from a downwardly revised 1.6% previously, the BLS reported.

Brexit

Overseas, the UK Parliament voted not to accept Prime Minister Theresa May’s revised Brexit deal, which included what May called legally binding assurances with the EU aimed at clarifying a contentious “Irish backstop” provision that would avoid a hard border between Ireland, an EU member, and Northern Ireland, a part of the UK. This marks the second time May has lost a “meaningful vote” on her Brexit deal. MPs are now set for a vote Wednesday on whether to allow the UK to leave the EU without a deal on March 29.

The British pound (GBPUSD=Xslipped against the dollar following the vote.

Economists and institutions including the IMF the Federal Reserve and Deutsche Bank have continued to cite Brexit uncertainty as a key downside risk to the global economy. However, the UK economy has remained relatively strong despite the ongoing tumult, some analysts have pointed out.

“We have seen a huge boost to the UK economic picture, with growth, industrial production and manufacturing production all beating market estimates,” Joshua Mahony, senior market analyst at IG Group, wrote in an email. “In particular, we have seen a sharp rise in UK growth figures, with a 0.5% monthly figure and 1.5% year-on-year number proving that the UK economy remains resilient despite Brexit fears and a wider global slowdown.”

Elsewhere, U.S.-China trade negotiations have continued this week as Chinese Vice Premier Liu He reportedly held a phone call with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer on Tuesday, according to China’s state news agency Xinhua.

Boeing

Investors continue to monitor developments surrounding the deadly crash of a Boeing’s 737 Max 8 jet used for Ethiopian Airlines Flight 302. Aviation officials in Ethiopia, China and Indonesia grounded fleets of the Max 8 jets Monday due to concerns about the model’s safety, given that it has now been involved in two deadly crashes in less than five months. Later, other countries including Australia, Malaysia and Singapore, as well as some carriers in Latin America, announced moves to ground flights with the aircraft.

The UK on Tuesday joined the slew of countries grounding flights involving the Boeing 737 Max 8, the UK Civil Aviation Authority issuing a statement saying that the move is a “precautionary measure” in the present absence of “sufficient information from the flight data recorder.” Later in the day, the European Union Aviation Safety Agency also suspended Boeing 737 Max 8 jet operations, saying it “is taking every step necessary to ensure the safety of passengers.”

The U.S. Federal Aviation Administration on Monday, however, deemed the planes to be airworthy but said Boeing must implement design changes. Boeing said it expects to deploy a software upgrade in the coming weeks across its fleet.

Boeing’s stock, which comprises about 10.9% of the Dow, fell 6.13% to $375.47 per share as of market close.


The SPDR Dow Jones Industrial Average ETF (DIA) fell $0.06 (-0.02%) in after-hours trading Tuesday. Year-to-date, DIA has gained 4.29%, versus a 5.15% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 82 ETFs in the Large Cap Value ETFs category.


This article is brought to you courtesy of Yahoo! Finance.