Economic data, healthcare shares pressure Wall Street

WASHINGTON: U.S. stocks edged lower on Thursday after a recent run of gains, pressured by weak economic data and a drop in healthcare shares, while investors kept a close watch on U.S.-China trade talks.

The Commerce Department said new orders for key U.S.-made capital goods unexpectedly fell in December, pointing to a further slowdown in business spending on equipment that could crimp economic growth.

Another set showed the Philadelphia Federal Reserve’s gauge on U.S. Mid-Atlantic business activity declined in February to its weakest level since May 2016.

“There are some concerning bits of data but the reaction is not terribly irrational because we’re up quite a bit for the year now,” said Kevin Divney, senior portfolio manager at Russell Investments in New York City.

The soft data threatened to snap the S&P 500’s three-day gain, which was driven by signs of progress in trade talks. Despite the dip, the index continues to hover near two-month highs.

The United States and China have started to outline commitments in principle on the stickiest issues in their trade dispute, marking the most significant progress yet toward ending a seven-month trade war, sources told Reuters on Thursday.

The two sides were trying to reach agreement before March 1, Reuters reported.

“Markets seem to almost be willing to bypass the weak data that we’ve seen for the optimism over a resolution on trade,” said Ryan Detrick, senior market strategist, LPL Financial.

At 12:34 p.m. ET the Dow Jones Industrial Average was down 63.59 points, or 0.25 percent, at 25,890.85, the S&P 500 was down 5.60 points, or 0.20 percent, at 2,779.10 and the Nasdaq Composite was down 10.27 points, or 0.14 percent, at 7,478.80.

Eight of the 11 major S&P sectors were lower, led by a 1.62 percent decline in energy index after oil prices eased from their highs.

Healthcare sector slid 0.72 percent, weighed down by Johnson & Johnson’s 1 percent fall.

The healthcare giant said it received subpoenas from U.S. regulators related to litigation involving alleged asbestos contamination in its signature Baby Powder product line.

Biogen Inc shares fell 3.3 percent after brokerage Stifel downgraded the stock to “hold” from “buy”. The Nasdaq Biotech index was down 1.43 percent.

Nike Inc shares dropped 1.2 percent after the company’s sneaker worn by emerging basketball star Zion Williamson split in half during a game.

Domino’s Pizza tumbled 9.7 percent after missing analysts’ estimates for quarterly same-store sales.

Among gainers, Albermarle’s shares jumped 6 percent after the lithium producer posted a higher-than-expected quarterly profit and gave a bullish 2019 outlook.

Declining issues outnumbered advancers for a 1.78-to-1 ratio on the NYSE and for a 1.42-to-1 ratio on the Nasdaq.

The S&P index recorded 29 new 52-week highs and no new lows, while the Nasdaq recorded 49 new highs and nine new lows.