Weakness in the tech sector and strength in healthcare stocks resulted in a mixed finish for the major indexes Wednesday.
It's already been a shaky week for stocks as recent economic data elevated worries about a potential recession this year. The latest signs of potential trouble came in the form of this morning's jobs and services sector data, both of which suggested slowing economic growth.
First up was data from ADP that showed the private sector added 145,000 jobs in March – below the 261,000 increase in February and lower than what economists were expecting. This follows yesterday's weaker-than-expected job openings figures and comes ahead of Friday's highly anticipated nonfarm payrolls report.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Slower employment growth in the ADP report reinforces the signal from the big drop in job openings reported yesterday," says Bill Adams, chief economist for Comerica Bank. "The labor market is getting less tight. This is one of the Fed's conditions for pausing its interest rate hiking campaign, but the Fed also wants to see core inflation slow more." This latest batch of economic data makes the next CPI report – due out next Wednesday morning – even more highly anticipated than usual.
Meanwhile, the Institute for Supply Management (ISM) said its services sector index, which measures business activity across several industries including healthcare, food services and retail, fell to 51.2% in March from February's 55.1%. While readings above 50% show that the services sector is still in expansion territory, its rate of growth slowed more than expected.
"Although this can be a noisy indicator, it may be a sign that the Fed's tightening gained traction against the resilient service sector last month," says Jonathan Millar, economist at Barclays. "Input prices also slowed, consistent with moderating cost pressures."
Shifting to single-stock news, C3.ai (AI) shares plunged 15.5% after noted short seller Kerrisdale Capital Management accused the artificial intelligence software company of irregularities in its accounting and disclosure procedures. Nvidia (NVDA) was another one of Wall Street's top AI stocks that struggled Wednesday, shedding 2.1% after Alphabet's (GOOGL, -0.2%) Google said its new supercomputer outperforms Nvidia-based systems.
While these losses resulted in technology (-1.2%) being one of the worst sectors today, healthcare (+1.8%) was one of the best on solid gains for Johnson & Johnson (JNJ). The Dow stock rose 4.5% after the pharmaceutical company said it will pay $8.9 billion to settle lawsuits alleging that the talc in its baby powder is carcinogenic.
At the close, the blue chip Dow Jones Industrial Average was up 0.2% at 33,482. The broader S&P 500 slipped 0.3% to 4,090, and the tech-heavy Nasdaq Composite fell 1.1% to 11,996.
As a reminder, it's a short week for investors, with the stock market closed for Good Friday.
Wall Street's best cash cows
We often talk about the importance of investing in quality companies during periods of market turmoil – and for good reason. "What we are telling our clients is that higher quality companies – those with strong balance sheets that can make it through a recession, are profitable and have sustainable business models – will be rewarded over the full [economic] cycle," says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
True, they won't go up as much as speculative stocks, and they might fall more than safer plays like utility stocks or consumer staples stocks when a recession finally hits, Zaccarelli adds. But over the next three years, the strategist believes "they will be the highest total returning opportunities."
Some of the highest-quality companies can be found among Wall Street's top cash cows – or those firms that have loads of money leftover after covering costs, capital expenditures and financial commitments. Firms with ample amounts of cash on their balance sheets often find themselves among Wall Street's best dividend stocks or those that reward shareholders with generous stock buybacks. They also tend to generate long-term value for investors.
-
Are COVID Shots Still Covered By Medicare?Getting the new COVID-19 vaccine covered by Medicare isn't as easy this year as it was in the past. Here's what you need to know before you take a trip to your pharmacy.
-
How Digital Platforms Are Changing the Way You Invest in GoldInvesting in gold is easier than ever thanks to digital platforms. Learn how online tools are lowering costs, increasing transparency and making gold accessible to all investors.
-
Stocks Rise to Start Fed Week: Stock Market TodayThe Nasdaq Composite and S&P 500 hit new record closing highs as Wall Street awaits the Fed's next rate cut.
-
Stocks Grind Up to New All-Time Highs: Stock Market TodayUnitedHealth stock led the Dow Jones Industrial Average amid increasing signs the labor market has not been well for months.
-
Markets Prepare for August Inflation Data: Stock Market TodayApple CEO Tim Cook is still important, but price action this week is as much about incoming inflation data ahead of next week's Fed meeting.
-
Big Tech Names Rise Above Broad Weakness: Stock Market TodaySome familiar names enjoyed solid rallies on the resolution of outstanding questions, but macro uncertainty hangs over the broader market.
-
Alphabet Stock Pops After Google Antitrust Ruling: What to KnowGOOGL stock is soaring Wednesday after a judge ruled that Alphabet does not have to divest its Chrome browser.
-
Stocks Slide to Start September: Stock Market TodaySeasonal trends suggest tough times for the stock market as we round into the end of the third quarter.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have TodaySherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
AI Start-ups Are Rolling in CashThe Kiplinger Letter Investors are plowing record sums of money into artificial intelligence start-ups. Even as sales grow swiftly, losses are piling up for AI firms.
