Published 12:00 am Thursday, March 13, 2014
A slide in the stock market steepened Thursday as rhetoric between the U.S. and Russia over Ukraine intensified. The Dow Jones industrial average dropped 200 points, putting it on track for its fourth loss in a row. Traders seeking safety piled money into U.S. government debt and utility stocks.
KEEPING SCORE: The Standard & Poor’s 500 index fell 24 points, or 1.3 percent, to 1,844 as of 3:15 p.m. Eastern Time. The Dow Jones industrial average fell 239 points, or 1.5 percent, to 16,100. The Nasdaq composite dropped 73 points, or 1.7 percent, to 4,249.
PRESIDENTIAL WARNING: President Barack Obama said Thursday that if Russia continues an aggressive path in Ukraine, the United States and other countries will be “forced to apply costs” to Moscow. Obama made his remarks after meeting with Ukraine’s new prime minister, Arseniy Yatsenyuk, at the White House.
CRITICAL VOTE: Crimeans are to vote on joining Russia on Sunday in a referendum that the U.S. and European Union say violates Ukraine’s constitution and international law. Russia has said it will respect the results of the referendum. Secretary of State John Kerry told a Senate committee on Thursday that Moscow should expect the U.S. and Europe to take measures against it should Russia act on a vote by Crimea to join Russia.
SEEKING SAFETY: “The hardening of the rhetoric in these communications is a change,” said Lawrence Creatura, a portfolio manager at Federated Investors. “Your defensive sectors, like utilities, are outperforming, while technology and consumer-facing industries are underperforming.”
DRILL BIT: Several companies that provide oil and gas offshore drilling services fell. Diamond Offshore Drilling fell $2.11, or 4.5 percent, to $44.26, while Noble Energy shed $1.41, or 4.6 percent, to $28.94. Transocean lost $1.35, or 3.3 percent, to $39.44, and National Oilwell Varco slid $2.55, or 3.3 percent, to $74.76.
MARKED DOWN: Dollar General fell $1.77, or 3 percent, to $57.52 after the company reported that its fourth-quarter earnings took a hit from harsh winter storms. It also issued a poor outlook for the year.
WORK IT: Shares of clothing company PVH, which owns brands such as Tommy Hilfiger and Calvin Klein, declined after Morgan Stanley downgraded the company, concluding that PVH will have to increase spending on advertising due to competition. PVH fell $6.78, or 5.5 percent, to $115.27.
SECTOR WATCH: Nine of the 10 sectors in the S&P 500 index fell. Information technology lost the most. Utilities bucked the trend, rising 1 percent. Investors tend to buy those stocks when they want to play it safe with lower-risk companies than pay steady dividends.
RETAIL REBOUND: U.S. retail sales rose 0.3 percent in February as Americans spent more on autos, clothing and furniture, the Commerce Department reported. Spending had fallen 0.6 percent in January. The increase suggests that spending has started to recover after being tempered by snowstorms and freezing temperatures that blanketed much of the country.
HEALTHIER JOB MARKET: Applications for unemployment benefits dropped 9,000 last week to 315,000. Applications are a rough proxy for layoffs. The declines indicate companies are confident enough about the economy to keep their staffs. Employers are hiring more after harsh winter weather lowered job gains in January and December.
CHINA WORRIES: A pickup in U.S. retail sales and better news on the job market failed to trump worries over the crisis in Ukraine and lingering concerns over China’s economy. The concerns over China worsened Thursday after government figures there showed industrial production rose in the first two months of the year at a rate that was lower than analysts were expecting. Retail sales growth also fell short of estimates.
“At this stage, investors are linking these negative data points coming out of China and they don’t like what they see,” Creatura said. “Even small hiccups there can have large implications for investors.”
POWERING UP: Plug Power reported revenue jumped to $8 million as the alternative energy company lined up some big clients. The news caused its shares to vault $1.14, or 16.8 percent, to $7.95. The stock has been rising in recent weeks.
BOND CRAVING: The yield on the 10-year Treasury note tumbled to 2.64 percent from 2.73 percent late Wednesday as bond prices rose. The yield affects rates on mortgages and other consumer loans.