The major domestic equity indexes were all in the black on Wednesday, led by gains in healthcare shares, and Boeing edged upward even as the United States joined other nations in grounding the company’s 737 MAX jets.
Boeing closed 0.5 percent higher at $377.14, recovering from a more than 3 percent fall in the afternoon, when the United States announced it was grounding Boeing’s 737 MAX jets following Sunday’s fatal crash in Ethiopia.
The U.S. Federal Aviation Administration cited new satellite data and evidence from the scene of Sunday’s crash, the second disaster involving the 737 MAX in less than five months. Boeing shares are still down about 11 percent since Friday’s close.
The world’s largest plane manufacturer had been the best-performing Dow component this year.
Also helping stocks Wednesday, fresh economic data strengthened the Federal Reserve’s patient stance on future interest rate hikes.
CVS Health Corp rose 3.5 percent after Bernstein started coverage of the pharmacy benefit manager with an “outperform” rating. The S&P 500 healthcare index rose 1.1 percent. UnitedHealth Group shares rose 2.6 percent.
Energy shares were also higher, with the S&P 500 energy index finishing up 1.09 percent.
Fueling some volatility in afternoon trading, U.S. President Donald Trump said he was in no rush to complete a trade deal with China that Washington wants to include structural reforms by Beijing, including how it treats U.S. intellectual property.
Day’s Economic News
New capital goods orders rose by the most in six months during January and shipments increased, but the trend in both measures of business spending on equipment remained soft, leaving forecasts for weak first-quarter economic growth intact.
The slowing economy is helping keep inflation tame, with other data on Wednesday showing producer prices barely rising in February, resulting in the smallest annual increase in more than 1-1/2 years. This environment supports the Federal Reserve’s wait-and-see approach to further interest rate hikes this year.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rebounded 0.8 percent, the largest gain since July. These so-called core capital goods orders fell 0.9 percent in December. On a year-over-year basis, core capital goods orders increased 3.1 percent
Core capital goods orders in January benefited from orders for machinery, which rebounded 1.4 percent after dropping 0.6 percent in December. Orders for electrical equipment, appliances and components rose 1.7 percent after falling 0.2 percent in the prior month.
However, orders for computers and electronic products declined 1.3 percent, the largest drop since March 2017. There were also decreases in orders for primary metals while orders for fabricated metal products were unchanged.
Shipments of core capital goods rose 0.8 percent in January after edging up 0.1 percent in the prior month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.
The January report was delayed by the federal government shutdown. The February report, which was scheduled for release this month, will now be published on April 2.
The strong core capital goods shipments in January, prompted a raise in estimates for first-quarter business equipment spending. Investment in equipment by businesses accelerated in the fourth quarter of last year after slowing in the July-September period.
The first-quarter GDP growth also received a small lift from a second report from the Commerce Department on Wednesday indicating construction outlays rose 1.3 percent in January as investment in public projects hit a more than eight-year high. Construction spending had declined for two straight months.
The Atlanta Fed raised its growth estimate for the January-March quarter by two-tenths of a percentage point to a 0.4 percent annualized rate. The economy grew at a 2.6 percent pace in the fourth quarter of 2018 after expanding at a brisk 3.4 percent rate in the July-September period.
The economy is losing steam as the stimulus from a $1.5 trillion tax cut fades. A trade war between the United States and China, slowing global economies and uncertainty over Britain’s exit from the European Union are other factors hurting activity.
The ebb in activity is helping keep price pressures under wraps. A third report from the Labor Department on Wednesday showed its producer price index for final demand edged up 0.1 percent in February, lifted by a rebound in the cost of gasoline. The PPI had fallen for three straight months.
In the 12 months through February, the PPI rose 1.9 percent. That was the smallest gain since June 2017 and followed a 2.0 percent increase in January.
A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.1 percent last month after climbing 0.2 percent in January.
The so-called core PPI increased 2.3 percent in the 12 months through February, the smallest rise since December 2017, after advancing 2.5 percent in January.
Data on Tuesday showed consumer prices rising moderately in February, with the consumer price index posting its smallest annual gain in nearly 2-1/2 years.
February’s tepid producer and consumer inflation readings suggest the Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) price index, likely retreated further from the Fed’s 2 percent target.
The core PCE price index increased 1.9 percent on a year-on-year basis in December after a similar gain in November.
The Commerce Department is scheduled to release January PCE price data on March 29. Publication was delayed by the government shutdown.