Wall St falls on wider March trade deficit - New York Report

STOCKS closed sharply lower yesterday, after a surprisingly wide March US trade deficit raised concerns that the economy shrank in the first quarter.

The $51.4bn March deficit was the highest in more than six years, larger than the $45.2bn the government assumed in its snapshot of first-quarter gross domestic product last week, suggesting that the economy had contracted.

“A negative number is scary for the market,” said Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Investments.

“It was something of a one-two punch between the trade-deficit report and higher interest rates that began overseas,” he said of yesterday’s stock selloff.

All 10 major S&P sectors fell, with the utilities index slumping 2.28 per cent, as investors dumped dividend stocks to take advantage of yields on benchmark 10-year Treasury notes at nearly two-month highs.

The Dow Jones industrial average fell 142.2 points, or 0.79 per cent, to close at 17,927.2. The S&P 500 lost 25.03 points, or 1.18 per cent, to 2,089.46 and the Nasdaq Composite dropped 77.60 points, or 1.55 per cent, to end the session at 4,939.33.

The decline is only the most recent of several volatile sessions. In the two weeks ending last Friday, the S&P 500 moved a daily average of 17.79 points, wider than the 12.43 point range in early March.

About 7.3bn shares changed hands on US exchanges, above the 7.01bn daily average for the last five sessions, according to BATS Global Markets.