We saw very bearish action in high-beta stocks, with weakness in key leadership sectors like biotech, and by day's end, the S&P was down 0.1%.
Biotech, which is largely viewed as a key indicator of investors' willingness to embrace risk, sell 2.7%, as measured by the Nasdaq Biotechnology Index (INDEXNASDAQ:NBI). With this decline, the group is now down 14.5% from the February 25 high.
Small caps also took it on the chin, with the Russell 2000 (INDEXRUSSELL:RUT) trading down 1.0%, and there was a nasty pullback in emerging markets. The stock markets of countries like Russia, Brazil, and China have been very hot as of late despite mixed global economic data trends, but all three sold off today.
Nonetheless, the action wasn't all bad. US housing and financial stocks did slightly better than the major averages, and energy stocks finished nicely in the green as crude oil crossed the $100 mark.
On the economics front, as expected, the European Central Bank kept its benchmark interest rate at 0.25%. However, ECB President Mario Draghi emphasized that the Bank will maintain an accommodative monetary policy to battle the prospect of inflation.
Here in the US, the ISM Non-Manufacturing PMI rose to 53.1, which was slightly below the consensus reading of 53.5. obless claims were also a modest disappointment at 326,000, which was above expectations of 319,000.
US markets still feel like they're working off some excess following 2013's 30% pop, though that hasn't yet translated to the major averages as the selling is happening in riskier stocks. One good illustration of the action is the big move up in utility stocks.
That group is up 8.6% year-to-date, and has continued going higher just as the aforementioned biotech and social media names have cratered. We've also seen nice, slow and steady upward moves in Big Pharma names like Pfizer (NYSE:PFE) and Merck (NYSE:MRK).
Tomorrow's Financial Outlook
All eyes are on tomorrow's March nonfarm payrolls report.
Current expectations call for a headline number of 200,000 with an unemployment rate of 6.6%.
Investors are looking for a rebound following the extended spell of bad weather that contributed to three straight weak reports. And given that the S&P is sitting near an all-time high, it's fair to say expectations are a bit elevated.
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