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CSX, transport stocks lead market lower
17-Jul-19 16:20 ET
Dow -115.78 at 27219.85, Nasdaq -37.59 at 8185.20, S&P -19.62 at 2984.42

https://www.briefing.com/investor/markets/stock-market-update/2019/7/17/csx-transport-stocks-lead-market-lower.htm

[BRIEFING.COM] The S&P 500 lost 0.6% on Wednesday, pressured by noticeable losses in the transport stocks after CSX Corp. (CSX 71.38, -8.17, -10.3%) provided disappointing earnings results and guidance. The broader market traded modestly lower for most of the day with losses accelerating into the close.

The Dow Jones Industrial Average lost 0.5%, the Nasdaq Composite lost 0.5%, and the Russell 2000 lost 0.7%.

CSX was presumably the biggest influence on the transports, but earnings warnings from trucking companies Knight-Swift (KNX 35.08, -0.81, -2.3%) and Covenant Transport (CVTI 14.65, -0.51, -3.4%) also contributed to the negative sentiment. Strikingly, the transports were among the best performers yesterday amid easing concerns about a downturn in the sector.

Evidently, the negative-minded guidance brought out the naysayers, yielding losses across the space and big losses in shares of road and rail companies like Union Pacific (UNP 164.55, -10.60, -6.1%) and Norfolk Southern (NSC 191.02, -15.44, -7.5%). The Dow Jones Transportation Average lost 3.6%, wiping out its monthly advance.

The S&P 500 industrials sector (-2.2%) was Wednesday's outright laggard, nearly doubling the losses of the second-worst performing energy sector (-1.2%). There were some bright spots in the space, though. Top-weighted component Boeing (BA 369.52, +6.77) rose 1.9% on no specific news catalyst, while United Airlines (UAL 94.78, +0.86, +0.9%) and Cintas (CTAS 260.37, +20.93, +8.7%) advanced on better-than-expected earnings results.

The S&P 500 utilities (+0.4%) and health care (+0.02%) sectors were the lone sectors that finished higher. Abbott Labs (ABT 85.76, +2.60, +3.3%) gave the health care sector some support after pleasing investors with its earnings results.

Despite earnings-related gains in Bank of America (BAC 29.19, +0.20, +0.7%) and U.S. Bancorp (USB 54.22, +1.18, +2.2%), the S&P 500 financial sector (-0.9%) was unable to gain any ground. Most components finished lower, as the decline in U.S. Treasury yields, and some curve-flattening, weighed on the sector.

The 2-yr yield declined three basis points to 1.83%, and the 10-yr yield declined six basis points to 2.06%. The U.S. Dollar Index lost 0.2% to 97.21. WTI crude lost 1.4% to $56.78/bbl.

Separately, The Wall Street Journal published a report right before the close, indicating that the U.S. and China remain conflicted about restrictions on Huawei Technologies. The report may have contributed to the increased selling into the close.

Reviewing Wednesday's economic data, which included Housing Starts and Building Permits for June and the weekly MBA Mortgage Applications Index:

Housing starts declined 0.9% m/m in June to a seasonally adjusted annual rate of 1.253 million units (Briefing.com consensus 1.270 million) while building permits declined 6.1% m/m to a seasonally adjusted annual rate of 1.220 million (Briefing.com consensus 1.300 million).
The key takeaway from the report is that the single-family supply dynamic will remain a limiting issue for the overall housing market as single-family starts were down 0.8% yr/yr while single-family permits were down 4.7% yr/yr.
The weekly MBA Mortgage Applications Index declined 1.1% following a 2.4% decline in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for July, and the Conference Board's Leading Economic Index for June on Thursday.

Nasdaq Composite +23.4% YTD
S&P 500 +19.1% YTD
Dow Jones Industrial Average +16.7% YTD
Russell 2000 +15.0% YTD