MarketView for March 10

Summary

The major equity indexes fell back a bit on Monday, weighed down by soft data out of China and Boeing's latest production setback. At the same time, merger and acquisition announcements, as well as company-specific news including on Facebook and Alexion Pharma, helped keep the S&P 500 and Nasdaq from chalking up greater losses.

China's exports fell unexpectedly by 18.1 percent in February, against expectations for a 6.8 percent rise, swinging the trade balance into deficit and adding to fears of a slowdown within the world's second-largest economy.

Boeing ended the day down 1.3 percent, closing at $126.89 on another production setback for the company's newest jet, as "hairline cracks" were discovered in the wings of about forty 787 Dreamliners. The weekend disappearance and presumed crash of a Malaysian airliner made by Boeing was another headwind for the stock.

Freeport McMoRan Copper & Gold lost 2.5 percent to close at $31.38 as the economic slowing in China sent London copper to a more than eight-month low.

Facebook hit an intraday record of $72.15 after UBS raised its price target on the stock to $90, from $72. The shares ended the day up 3.2 percent to close at $72.03.

Alexion Pharmaceuticals chalked up a gain of 7.1 percent to close at $180 after it raised its profit and sales forecasts for the year. The French government agreed to raise reimbursement payments for the company's treatment for two rare blood disorders.

According to a company spokesman, employees of Freescale Semiconductor who were on the Malaysia Airlines flight were part of a broad push to make Freescale more efficient and cost effective. Freescale shares ended the day down 1.3 percent to close at $23.09.

Chiquita Brands and Irish rival, Europe's largest distributor, struck an all-stock merger deal to create the world's biggest banana supplier. Chiquita shares ended the day up 10.7 percent to close at $12.

United Rentals gained 3.8 percent to $91.82. The world's largest equipment rental company said it agreed to buy privately-held National Pump, the second-largest specialty pump rental company in North America, for $780 million.

FMC rose 6.7 percent to $83.10. The chemicals manufacturer said it would split into two companies, one comprising its minerals business and the other agricultural, health and nutrition businesses.

Traders kept checks on Ukraine. Unidentified armed men fired in the air as they moved into a Ukrainian naval post in Crimea on Monday in the latest confrontation since Russian military groups seized control of the Black Sea peninsula. Russia said the United States had spurned an invitation to hold new talks on resolving the crisis.

Approximately 6 billion shares changed hands on the major equity exchanges, according to data from BATS Global Markets, a number that was below the daily average of about 6.98 billion shares so far this month.

Fed Likely to Keep QE3 Reductions on Plan

The Federal Reserve will continue to trim its monthly asset purchases at a $10 billion pace, an influential Fed official said on Monday as he also detailed how the U.S. central bank might rewrite its plan for keeping interest rates low.

The comments from Charles Evans, president of the Chicago Fed and among the most dovish of Fed members, were perhaps the strongest indication yet that the Fed will keep cutting stimulus at each upcoming meeting, including one next week.

"We're at a point now where we're ... moving away from purchasing assets, we're tapering, and our balance sheet continues to be very large but we're not going to add to it as much," Evans said.

"The last two meetings we reduced the purchase flow rate by $10 billion and we're going to continue to do that," he said flatly.

The Fed, responding to a broad drop in unemployment and a pick-up in economic growth, is now buying $65 billion in bonds each month to reduce longer-term borrowing costs and stimulate investment and hiring. The stimulus program started in 2012 and continued until December 2013, at a $85-billion pace.

With the bond buying winding down, the Fed's more immediate challenge is re-writing a pledge to keep rates near zero until well after the unemployment rate falls below 6.5 percent. Because joblessness has fallen quickly to 6.7 percent, policymakers are debating how to adjust that pledge without giving the impression they will tighten policy any time soon.

The Fed could make the delicate change at a policy-setting meeting March 18-19, which will be Janet Yellen's first as chair.

Evans is credited with conceiving the idea of tying interest rates to economic indicators such as unemployment and inflation. On Monday, he said the new guidance should reinforce that rates will stay low for "quite some time" and that much will depend on continued improvement in the labor market.

"It ought to be something that captures well the fact that (rates are) going to continue to be low well past the time that we change the language," Evans told reporters.

"Tick through the different labor market indicators: payroll employment, unemployment, labor force, vacancies, job openings and things like that," he continued. "We somehow want to capture that general improvement in labor market indicators, but that is hard."

Evans added that the Fed will be accommodative "for really quite some time," and added that he expects the first rate rise to come around early 2016.

Looking deeper into the future, he said the Fed would not have to sell the mortgage-based bonds it is now buying up, but could instead let them mature - an idea endorsed by other Fed policymakers.