U.S. stocks surrendered early gains to head south Wednesday as health care and technology shares weighed heavily on the market while sentiment remained fragile over fresh evidence of slowing global growth.
Investors also sought to unravel the implications of falling bond yields on the heels of increasingly dovish central banks around the world.
How are benchmarks faring?
The Dow Jones Industrial Average DJIA, -0.10%[1] dropped 128 points, or 0.5%, to 25,529, while the S&P 500 index SPX, -0.36%[2] was off 19 points, or 0.7%, to 2,799 with health care stocks down 1% and tech shares sliding 0.9%. The tech-laden Nasdaq Composite Index COMP, -0.58%[3] fell 69 points, or 0.9%, at 7,622.
At its highs Wednesday morning, the Dow had gained 100 points, the S&P 500 added 7 points, while the Nasdaq had advanced 21 points.
What’s driving the market
Demand for bonds remained strong, pushing yields on longer-term government debt to levels not seen in more than a year. Apprehension over softer growth in Europe and China fueled appetite for bonds, particularly after the eurozone’s top central banker voiced concerns over the effects of negative interest rates, a policy the European Central Bank introduced nearly five years ago. Those comments came after the ECB lowered its forecast for eurozone gross domestic product this year to 1.1% from 1.7% and announced a fresh round of bank stimulus several weeks ago.
The U.S. trade deficit narrowed in January to a five-month low of $51.1 billion versus $59.9 billion in December. Economists polled by MarketWatch predicted a $57.7 billion shortfall.
Data from China’s National Bureau of Statistics showed that profits at industrial firms fell by 14% in January and February, the largest decline since 2011.
Eroding confidence in the economic outlook across the globe also compelled the Federal Reserve to lower domestic growth expectations for 2019 to 2.1% from 2.3% at its policy gathering earlier this month.
Newfound dovishness from central banks and the weaker-than-expected data have come as the 10-year Treasury yield TMUBMUSD10Y, -1.79%[4] fell below that of three-month bill, a phenomenon that is often viewed as an accurate indicator of coming recessions in the next 18 to 24 months, which, in turn, has raised anxieties on Wall Street. Recently, the 10-year yield was at 2.38%, falling further toward its lowest level since...