Even after The S&P 500 rose to a record closing high at the close of the first full week of March 2014, after better-than-expected American jobs data for February 2014, U.S. stocks fell at the beginning of the following week as economic data from Asia and lingering concerns about the conflict in Ukraine; continued to concern investors.
The Dow Jones Industrial Average fell 82 points, or 0.5 percent, to 16371 in early trading and the S&P 500 lost six points, or 0.4 percent, to 1872. The Nasdaq Composite Index declined 16 points, or 0.4%, to 4321. Asian markets were broadly lower as investors began to seek alternative investments with less risk, with China’s Shanghai Composite falling 2.9 percent to a near two-month low. China’s central bank weakened the daily reference rate for its currency by the largest percentage in more than a year and a half.
“You’re seeing some investors take profits in some of the momentum names. A lot of people are content to just stick with the buy-and-hold mentality until there’s a bigger change in sentiment.”- Managing Director at JonesTrading Institutional Services LLC
Data out over the second weekend of March 2014 showed that Chinese exports dropped 18.1 percent in February, down from a year ago. This was a shock to some analysts who had expectations of a 5 percent increase. The surprisingly sharp drop raised some concerns about the strength of the world’s second-largest economy and left investors scrambling to find a good reason to invest in the region. Adding to the economic turmoil in Asia, Japan reported its economy grew more slowly than initially estimated in the first three months of 2013, affecting forecasts for 2014.
Aside from the disappointing February 2014 performances from leading Asian economies, it can be expected that the investment community will closely monitor Russia’s occupation of the Crimea region, and hope that it has no serious repercussions for European markets; as well.