Wall Street goes down over sudden drop in data

Wall Street's main indexes reversed from early gains to fall 1 per cent on Monday after data showed a surprise drop in December construction spending, which triggered profit-taking and offset optimism that a U.S.-China trade deal was imminent.

A report over the weekend that U.S. President Donald Trump and his Chinese counterpart Xi Jinping could sign a formal trade pact at a summit around March 27 sparked a 0.5 per cent jump in the S&P 500 index early in the session. But the benchmark index pared gains after the Commerce Department reported construction spending fell 0.6 per cent in December after an unrevised 0.8 per cent rise in November, further evidence the economy lost momentum at the end of 2018.

"What pushed investors' nerves is the fact that we've been up such a long time with no reprieve, so the data provided an excuse for investors to take money off the table," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. Hopes of a U.S.-China trade deal and a dovish Federal Reserve has spurred a strong run in stocks. The S&P 500 has surged nearly 11 per cent this year and is now about 6 per cent away from its Sept.20 record closing high.

The S&P 500 breached 2,800 twice last week, before finally closing above that mark on Friday for the first time since Nov.8. "Right above the 2,800 level is a significant amount of resistance. Above this level is free air, above it is a return to the highs," said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.

All the major S&P sectors fell, with seven indexes posting a more than 1 per cent drop. The healthcare sector tumbled 1.85 per cent, taking the biggest hit. At 13:19 p.m. ET the Dow Jones Industrial Average was down 359.19 points, or 1.38 per cent, at 25,667.13, the S&P 500 was down 30.07 points, or 1.07 per cent, at 2,773.62 and the Nasdaq Composite was down 71.35 points, or 0.94 per cent, at 7,524.00.

Among stocks, CenturyLink Inc dropped 9.2 per cent after the telecom services company delayed an annual report with the U.S. Securities and Exchange Commission. Packaged food maker Kraft Heinz Co gained 2.38 per cent after brokerage Morgan Stanley raised its rating on the stock.

Dish Network Corp rose 2.4 per cent after brokerage Guggenheim Partners said the satellite TV service provider's shares will see significant upside in 2019. Declining issues outnumbered advancers for a 2.48-to-1 ratio on the NYSE and for a 2.37-to-1 ratio on the Nasdaq.

The S&P index recorded 40 new 52-week highs and two new lows, while the Nasdaq recorded 75 new highs and 22 new lows.