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Mar 29, 2017

Wall Street at Close Report on March 29, 2017: Nasdaq Closes for 4th Straight Gain, as Dow Lags Behind


Wallace Witkowski, Ryan Vlastelica


The tech-heavy Nasdaq closed higher for a fourth straight session Wednesday, while the Dow industrials finished lower, as stock investors digested hawkish comments from Federal Reserve speakers and a drop in U.S. gasoline inventories bolstered the energy sector.
The Nasdaq Composite Index COMP, +0.38%  climbed 22.41 points, or 0.4%, to finish at 5,897.55, led by a 20% surge in shares of Vertex Pharmaceuticals Inc. VRTX, +20.45% after the company’s drug for cystic fibrosis met endpoints in two late-stage clinical studies. Additionally, shares of Amazon.com Inc. AMZN, +2.14%  boosted the index as they rose to a record high of $876.44 and closed up 2.1% as one analyst said that the company’s “retail dominance” was driving investor interest.
The Dow Jones Industrial Average DJIA, -0.20%  fell 42.18 points, or 0.2%, to close at 20,659.32, for its ninth losing session in the past 10. Shares of UnitedHealth Group Inc. UNH, -1.16%  and Travelers Cos. TRV, -1.04%  were the largest decliners. Despite the Dow’s recent slump, the blue-chip average is only down 1.4% over that period, and remains just 2.4% below an all-time high reached March 1.
Meanwhile, the S&P 500 index SPX, +0.11%  finished up 2.56 points, or 0.1%, at 2,361.13. Energy XLE, +1.37%  was the day’s largest gainer, with the sector closing up 1.2% following bigger-than-expected declines in gasoline and distillate stockpiles in the latest week, a positive sign for demand. Chesapeake Energy Corp. CHK, +7.79%  shares rallied 7.8%, while Hess Corp. HES, +4.87%  jumped 4.9% and Marathon Oil Corp. MRO, +4.07%  shares rose 4.1%.
Gains in energy did most of the heavy lifting, as only five of the S&P 500’s 11 primary sectors finished in the green. Financials, which have been big gainers in recent months, led decliners, closing down 0.5%.
“It’s going to be touch-and-go until earnings season and then the entire conversation is going to change,” said Karyn Cavanaugh, senior market strategist at Voya Financial, in an interview. Cavanaugh said investors are focusing too much on the drama of President Donald Trump and Congress to appreciate the economic underpinnings of the market.
“We’re probably going to get double-digit earnings growth this quarter, showing that things are getting better even without Administration changes,” she said.
First-quarter earnings, with the bulk of reports beginning in mid-April, are expected to grow by 9.1%, in what would be the largest year-over-year quarterly gain since the fourth quarter of 2011, according to John Butters, senior earnings analyst at FactSet. Voya’s Cavanaugh feels that will easily become a double-digit gain since estimates are traditionally conservative.
“Today is just a pause,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab. “Valuations are a bit stretched, but that’s nothing unusual. Meanwhile, economic data remains strong and markets are optimistic that we’ll see progress on tax reform out of Washington.”
Traders are also tracking the U.K.’s invocation of Article 50, which officially starts its withdrawal from the European Union.
“This has never happened before, so no one knows how it will play out,” Frederick said. “It’s an important event, but I’m not sure it’s a negative event, at least as far as the market goes.”
Economic news and Fed speakers: Chicago Fed President Charles Evans said the fundamentals of the economy were good, and called for another one or two interest-rate increases in 2017. The Fed raised rates at its March meeting, and most investors expect a total of three this year.
Boston Fed President Eric Rosengren said the central bank should set a default of a rate increase every other meeting this year, while San Francisco Fed President John Williams said he sees three more rate hikes this year.
In the latest economic data, pending-home sales rose 5.5% in February, rising to their highest level in nearly a year.
Opinion: The ‘reflation’ trade since Trump’s election might be going in the other direction
Why the bank of the future will look like an Apple store
As e-banking technology has improved, the number of bank branches is expected to fall by a third in the next decade. But rather than get rid of branches altogether, banks are trying to give them makeovers to get customers to still come in.
Stock movers: Restoration Hardware parent RH RH, +14.95%  jumped 15% a day after the home furnishings retailer posted better-than-expected earnings.
Mylan NV MYL, -3.28%  shares fell 3.3% after the Food and Drug Administration didn’t approve the company’s generic version of GlaxoSmithKline PLC’s GSK, +0.75%  Advair Diskus asthma treatment.
Dave & Buster’s Entertainment Inc. PLAY, -3.38%  fell 3.4% after delivering a disappointing guidance, while Sonic Corp. SONC, +5.43%  rallied 5.4% after its results.
Other markets: Oil futures CLK7, +2.54%  settled up 2.4% at $49.51 a barrel. European stocks SXXP, +0.33% finished higher as the U.K. triggered its exit from the EU while the British pound GBPUSD, +0.0483%  was dropping on Brexit trigger day. Asian markets closed mostly with gains. Gold futures GCJ7, -0.19%  settled down 0.2% at $1,253.70 an ounce, and a key dollar index DXY, +0.26% rose 0.3%.
Read: How to trade the pound as Theresa May pulls the Brexit trigger
Check out: MarketWatch’s Economic Calendar
—Victor Reklaitis in London contributed to this article.