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US stocks post a record then fall, as financials and materials sold

Last updated: 16:15 02 Mar 2017 EST, First published: 03:59 02 Mar 2017 EST

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US stocks ended on a dull note on Thursday, with the Dow making a symbolic record high at the start of the session and then tickers edging further into the red as the day wore on.

The S&P 500 market bellwether ended down 0.6% at 2381 while the Nasdaq Composite emulated the direction with a 0.7% lower finish at 5861.

The Dow Jones Industrial Average closed in a similar format to the other majors, except that it at least opened the session higher, pierced a fresh intraday record high of 21,129.20 and then started to grind lower too, ending down 0.5% at 21,002.

Profit-taking on two sectors which fared well this week – financials hopeful of a March rate hike and materials hopeful of President Donald Trump’s pledge of more infrastructure spending – were the undoing of tickers this session.

The markets were pricing in a 90% chance of a rate hike from the Fed in mid-March.

Even a premium debut for newbie Snap Inc (NYSE:SNAP), the owner of the social media instant photo sharing craze Snapchat, failed to arrest the market declines.

Snap ended its first session up 46.2% at $24.86 – having hit a high late in the session of $26.05. The IPO priced late Wednesday at $17, making holders instantly richer. But whether those riches will remain like the brand – instant and vanish – will remain to be seen in coming days. Facebook (NASDAQ:FB) upon its debut also jumped, before retarding and then working its way up again.

The top decliner on the S&P 500 was copper name Freeport-Mcmoran Inc (NYSE:FCX) down 4.9% to $13.31 as it was one of the stocks to take the brunt of the sell-off in materials stocks.

The S&P Midcap 400 closed down a hefty 1.1% at 1738 and led by Greif Bros. Corp (NYSE:GEF) down 11.8% at $53.21 after the company’s first-quarter earnings missed Street forecasts.

The S&P Smallcap 600 closed down 1.2% at 851 and led by Adeptus Health Inc (NYSE:ADPT), down a hefty 56.8% to $2.83 after the company said it will not fulfil its deadline to file 2016 accounts due to "material weaknesses" in its financial reporting.

On the flip side, the small-caps top gainer was retailer Abercrombie & Fitch (NYSE:ANF), up 14% at $13.33. Although its fourth quarter earnings were lacklustre at best, it did offer a positive outlook for 2017.


Early trading

Wall Street sank in early Thursday trading, with even a buoyant debut for Snap Inc (NYSE:SNAP) failing to muster an appetite for gains, but it came after the Dow posted a symbolic record high.

After the froth which has been gathering in the market since November’s elections, a breather was always on the cards, and for the second time in a week most tickers defied futures-traded index readings to open the opposite way to what had been on the cards.

But at least the Dow managed to hit 21,129.20 within one minute of opening, before it slid. It was last down 0.3% at 21,061.

If there was something to get excited aobut, it had to be news of a new IPO debut.

Shares in Snap Inc (NYSE:SNAP), the parent of the vanishing messaging service Snapchat, opened at $24, up sharply on Thursday, at a considerable premium to the $17 the group priced at the previous day and giving it a market valuation of $27.8bn.

Snap also took Wall Street by storm as some 80mln shares exchanged hands within 20 minutes of its first trade after 1100 ET (1600 GMT), sending it to the top of volume charts for US exchanges.

Snap shares performed well in their debut on the Big Board, zooming higher as much as 48.2% to $25.20. It was last up 46.4% at $24.88.

The strong opening on the New York Stock Exchange comes after Snap floated its shares above the $14 – $16 range that it had forecast amid strong demand from investors.

Snap’s IPO market valuation of almost $20bn represents the biggest listing of a tech company globally since Alibaba in 2014.

The S&P 500 fell 0.4% to 2,386 in early trading, weighed down by profit-taking in the financials and the materials sectors, while the Nasdaq Composite shed 0.5% - the most of the majors – to 5877.

Investors booked profits in financials now that the latest Fed official to speak has added his weight to the deafening and well-priced in expectations of a rate hike in mid-March.

Federal Reserve governor Jerome Powell said “the case for a rate increase in March has come together, and it is on the table for discussion”.

Federal fund futures point to a 90% chance of a rate rise this month, up from 80% on Wednesday.

Also weighing on the bourse, stocks of surplus natural gas in the US increased last week in the first February rise on record, the Energy Information Administration said on Thursday.

The net injection of 7bn cubic feet into underground storage caverns came as unseasonably balmy temperatures allowed furnaces to burn less gas.

Already weaker US oil prices, extended declines and the West Texas Intermediate was down 1.8% to $52.85.

However, the biggest decliner on the S&P 500 was Caterpillar Inc (NYSE:CAT), down 4.3% to $94.36 a day after being one of the beneficiaries of US President Donald Trump’s declaration of a big infrastructure spend when he spoke to Congress for the first time as head of state.

The S&P Midcap 400 was down 0.8% to 1744 and led by materials firm Greif Bros. Corp (NYSE:GEF), down 9.4% at $54.64 as profit-taking followed across the materials and financials sector.

The S&P Smallcap 600 was down 0.9% at 854 and led by Adeptus Health Inc (NYSE:ADPT) down 46.1% to $3.53 after the healthcare operator said it was unable to file 2016 annual report on Form 10-K by deadline and it intends to file on or before March 16.


Pre-Open

US stocks are set to open firmer and notch up fresh record peaks on Thursday after the Dow and S&P 500 notched up milestones the previous session on expectations for a March rate hike and with the session underpinned by America’s new jobless falling to a 44-year low.

Investors were also reassured by the statesmanship of delivery of US President Donald Trump’s first speech to Congress, even if details on tax cuts, the future of Obamacare, and deregulation were thin and how to fund them all thinner still.

The number of Americans applying for first-time unemployment benefits fell to a near 44- year low last week, reinforcing the picture painted by recent economic indicators of continued strength in the US labor market.

US weekly jobless claims fell by 19,000 to 223,000, versus expectations for a rise to 245,000.

The S&P 500 is seen opening up 0.02% while the Dow Jones Industrial Average was set for the firmest of gains among the trio of 0.2% - and that means a fresh record high deeper into 21,000 territory it scaled on Wednesday. The Dow has now skyrocketed 2,700 points since Trump's election victory in November.

The tech-heavy Nasdaq Composite is likely to rise 0.1%.

But tech stocks might get a leg up from the big day for Snapchat owner Snap (NYSE:SNAP) which will debut on the New York Stock Exchange on Thursday.

Snap priced its initial public offering at $17 a share on Wednesday. It had previously proposed a range of $14 to $16 a share. That will give Snap a market value of nearly $24bn, making it the largest US tech IPO since Facebook (NASDAQ:FB).

Without wanting to be superstitious, the tech debutante joins a slim list of social media companies to list on the NYSE as opposed to NASDAQ. Snap will be in the company of contemporaries like Twitter Inc (NYSE:TWTR), struggling to grow its user base. That’s an accusation leveled at Snap too, which continues to struggle to make money and signaled a profit may not be coming soon. The company suffered losses of $515mln in 2016, up from a loss of $373mln the year before.

But investors were not raising a glass to brewer Anheuser-Busch InBev (NYSE:BUD) after the company reported worse-than-expected quarterly results. The company said that challenges in Brazil hurt its overall performance. ADRs on Wall Street were down 3.7% at $105.87 pre-market.

Bookseller Barnes & Noble Inc. (NYSE:BKS) on Thursday reported fiscal third-quarter earnings of $70.mln on revenue of $1.3bn in the period. Shares were down 3% at $9.60 pre-market.

Meanwhile, Kroger Co. (NYSE:KR) reported fiscal fourth-quarter profit of $506mln which matched expectations. Shares were down 3.8% at $30.85 pre-market.

On the flipside shares of retailer Abercrombie & Fitch Co. (NYSE:ANF) were up 6.1% at $12.40 pre-market – despite missing earnings expectations. The company reported fourth-quarter net income of $48.8mln, or 71 cents per share, down from $57.7mln, or 85 cents per share, for the same period last year.

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