MarketView for March 24

Summary

It was another gloomy day on Wall Street with the major equity indexes managing to recover some of their day’s losses but still ending in the red at the closing bell. So what was the reason for the day’s morose activity? It actually was a little bit of a lot of things, including the Ukraine situation, Russia’s ouster from the G8 and now the G7 major economy conferences, a missing and now believed lost, although there is still no hard proof such as wreckage, Boeing airliner, and so on.

The concerns that the crisis in Ukraine could escalate gave investors a reason to drop some of the market's biggest trading favorites. Ukraine announced the evacuation of its troops from Crimea, essentially yielding the region to Russian forces, which seized a Ukrainian marine base. While few U.S. companies have excessive exposure to the region, investors are concerned about the potential economic fallout from any escalation in tensions.

As a result, the Nasdaq fell below its 50-day moving average earlier, in a sign of weakening near-term momentum. Driving the downturn were companies such as Netflix, down 6.7 percent to close at $378.90, Facebook down 4.7 percent at $64.10 and TripAdvisor down 3.9 percent at $97.58. All three had scored sharp gains in 2013.

The Nasdaq biotechnology index .NBI, which rose 66 percent last year, fell 3 percent in its fourth straight daily decline. Over those four sessions, the biotech index slid 9 percent. On Friday, the index marked its worst day since October 2011.

The CBOE Volatility Index, a widely used gauge of investor sentiment, rose 0.6 percent, but was still relatively subdued, at 15.09. At the same time, the Dow's losses were limited by a rise in Procter & Gamble, up1.8 percent to $79.30 as it broke a four-day losing streak.

In the latest snapshot of the economy, financial data firm Markit said its preliminary read on March manufacturing activity slowed after nearing a four-year high last month. Markit, also pointed out that the rate of growth and the pace of hiring remained strong.

Herbalife reported that it would allow three more representatives of billionaire investor Carl Icahn, the company's largest shareholder, to join its board. The shares ended the day up 6.7 percent to close at $52.86.

NU Skin chalked up a again of 18.2 percent to close at $88.66 on heavy volume. China fined the company $540,000 for illegal product sales and misleading local consumers, a smaller penalty than expected.

Approximately 6.4 billion shares changed hands on the major equity exchanges, slightly below the 6.9 billion share average so far this month, according to data from BATS Global Markets.

Factory Activity Slows Somewhat

Activity in the Nation’s factories slowed in March after nearing a four-year high last month. However, the rate of growth and the pace of hiring remained strong, according to a report released by Markit, a data collection firm, on Monday.

Markit said its "flash" or preliminary Manufacturing Purchasing Managers Index fell to 55.5 from 57.1 in February. Readings above 50 indicate expansion. The reading was still comfortably ahead of the 53.7 this past January, suggesting the effects of a harsh winter have started to fade.

The new orders component fell to 58.0 from 59.6 in February, partly the result of a decline in overseas demand, Markit said. Output edged down to 57.5 from 57.8 while firms took on workers for a ninth consecutive month.

The survey "adds to evidence that the sector has shrugged off the weather-related weakness seen earlier in the year," said Markit chief economist Chris Williamson, adding the still solid showings for output and new orders was "encouraging news."

It is likely that the harsh winter that enveloped much of the country in January and February reduced first-quarter growth. The economy grew at a 2.3 percent rate in the final four months of 2013.