US Stocks Market Overview – Stocks Slip, Driven Lower by Healthcare, Consumer Staples Buck the Trend

Energy demand declined year over year
David Becker


Stocks edged lower on Wednesday, with the Dow Industrials and moving between positive and negative territory for most of the session. Most sectors were lower with consumer staples bucking the trend. Energy shares traded under pressure as crude oil slipped follow weak inventory demand figures. Healthcare lead the way down. The US trade defict fell in February as exports to China rose. IBM weighed on stock prices following worse than expected financial results.

The Trade Deficit Narrowed

The US trade deficit for goods and services narrowed in February to $49.4 billion in February, its lowest level since June 2018 and well below estimates according to the Commerce Department. Expectations were for the trade deficit in February to increase to $53.8 billion from $51.1 billion in January. The drop was due to a 28.2% decrease in its goods deficit with China as exports to the nation surged. Exports to China rose $1.6 billion to $9.2 billion while imports fell $1.5 billion to $39.3 billion. That brought the total deficit with China to $30.1 billion. The decline in the deficit likeling increased Q1 GDP above 2%. Overall, exports for the month rose $2.3 billion to $209.7 billion, while imports increased $600 million to $259.1 billion. Year over year goods and services deficit fell 7.6%, or $8.3 billion, from the same period in 2018. Exports rose $11.1 billion, or 2.7%, while imports increased $2.8 billion, or 0.5%.

Crude Oil Demand Slips

The Energy Department reported that total products demand over the last four-week period averaged 20.1 million barrels per day, down by 3.6% from the same period last year. During the past month, gasoline demand averaged 9.4 million barrels per day, down by 0.2% from the same period last year. Distillate fuel demand averaged 3.9 million barrels per day over the past four weeks, down by 7.6% from year over year. Jet fuel demand was down 5.3% compared with the same month last year.

Inventories Came Out in Line with Expectations

US crude oil inventories decreased by 1.4 million barrels from the previous week. Gasoline inventories decreased by 1.2 million barrels last week and are about 1% below the five year average for this time of year. Distillate fuel inventories decreased by 0.4 million barrels last week and are about 5% below the five year average for this time of year. Total commercial petroleum inventories increased last week by 2.5 million barrels last week.

IBM Weighed on the Dow

International Business Machines reported revenue declined even more than expected in a Tuesday earnings report. Revenue declined nearly $900 million, to $18.18 billion from $19.07 billion in the year-ago quarter. The company reported first-quarter net income of $1.59 billion, or $1.78 a share, compared with $1.68 billion, or $1.81 a share, in the year-ago period. Adjusted earnings were $2.25 a share. Expectations were for earnings of $2.22 a share on revenue of $18.47 billion.

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