Biotech Bounces, Springs a Trap on the Bears
Today's financial recap and tomorrow's financial outlook.
The Reserve Bank of India surprised investors overnight with a quarter-point cut to its benchmark repurchase rate. Economists had expected a cut in April.
The ADP Employment Change for February was 212,000, missing the 219,000 consensus by a small margin. However, January's figure was revised up to 250,000 from 213,000.
The ISM Non-Manufacturing Composite for February came in at a better-than-expected 56.9. The February Markit Composite PMI also beat estimates.
Additionally, the Fed's Beige Book was generally positive regarding the economy. The Fed noted that the US economy was growing at a moderate pace, with steady manufacturing gains and hiring trends.
Crude oil fell sharply after inventories showed an enormous build. However, crude rallied hard into the close after the release of the Beige Book.
The S&P 500 quickly fell 1% at the open, but began a steady march up, led by the biotech sector.
While the S&P finished the day down 0.4%, the IBB iShares Nasdaq Biotechnology ETF (IBB) rose 0.6%. The SPDR S&P Biotech ETF (XBI), which includes many small and mid-cap biotech names, rose 2.0%.
Biotech, along with other healthcare stocks, performed well as investors expected a positive outcome from a Supreme Court challenge to the Affordable Care Act.
Aluminum stocks were weak today after Bank of America Merrill Lynch downgraded its aluminum price forecast. The bank also downgraded aluminum producers Alcoa (AA) and Century Aluminum (CENX).
Regional banks and real estate stocks also exhibited relative underperformance.
Netflix (NFLX) fell intraday as the company's CFO made comments about slowing subscriber growth at a Morgan Stanley conference.
However, the stock recovered most of its gains into the close.
Thursday's Financial Outlook
Economic data will continue flowing tomorrow with Jobless Claims, Nonfarm Productivity, Unit Labor Costs, Factory Orders, and Natural Gas Inventory numbers on the way.
In earnings, retailers Costco (COST) and Kroger (KR) both report before the opening bell.
Overseas, both the Bank of England and the European Central Bank will announce their rate decisions. ECB President Mario Draghi will hold a press conference, at which he is likely to elaborate on details of the European QE program.
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