Daily Update: US Stocks Retreat as Trump Reshuffles Cabinet – Hacked

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U.S. stocks declined Tuesday, reversing a strong open as political turmoil in Washington weighed on investor sentiment.

Nasdaq Pulls Back from Record

All of Wall Street’s major indexes finished in negative territory on Tuesday, with the Nasdaq Composite Index pulling back from record territory. The technology-driven index fell 1% to close at 7,511.01.

The broader S&P 500 Index was down 0.6% by the close to settle at 2,765.31. Seven of 11 sectors contributed to the loss, with financials and information technology each shedding more than 1%. Energy and consumer discretionary stocks also posted firm losses.

The Dow Jones Industrial Average declined 171.58 points, or 0.7%, to settle at 25,007.03.

Al three major indexes started the day in positive territory before giving back gains on political headlines involving the Trump administration.

A measure of implied volatility known as the CBOE VIX rose for a second consecutive day but continued to trade below the historic average. Wall Street’s gauge of investor anxiety rose edged up more than 3% to 16.34, on a scale of 1-100 where 20 represents the historic average.

Tillerson Out, Pompeo In as Secretary of State

President Donald Trump removed Rex Tillerson from his post as Secretary of State on Tuesday, a move that caught markets and members of his own party off guard. CIA Director Mike Pompeo was immediately named the successor, ending months of public discord between Trump and his former Secretary of State.

The decision to replace Tillerson comes as the Trump administration embarks on high-stakes negotiations with North Korea on matters ranging from economics to Pyongyang’s nuclear program. Although the Secretary of State is not considered a key decision-maker on economic policy, the cabinet shuffle triggered renewed anxiety over the internal dynamics of the Trump administration.

Trump praised Pompeo for earning “the praise of members in both parties by strengthening our intelligence gathering, modernizing our defensive and offensive capabilities, and building close ties with our friends and allies in the international intelligence community.”

Inflation Rises

A closely-watched report on U.S. inflation came in as expected Tuesday, all but confirming the Federal Reserve’s plans to raise interest rates later this month.  The consumer price index (CPI) rose 0.2% in February, which translated into a year-over-year gain of 2.2%, the Department of Labor reported from Washington. That was slightly ahead of January’s 2.1% annual pace.

So-called core inflation, which strips away volatile goods such as food and energy, also rose 0.2% on month and 1.8% annually.

The U.S. central bank keeps close tabs on inflation to determine the future path of interest rates. Fed officials are widely expected to raise interest rates by a quarter point at next week’s FOMC meeting.

Featured image courtesy of Shutterstock.

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