MARKET SNAPSHOT: U.S. Stocks Slide As Crude-oil Prices Unravel
Facebook, Tesla fall sharply, offsetting Fed optimism
U.S. stocks benchmarks traded slightly lower--but were paring losses--Thursday afternoon as the energy sector tumbled in sync with a drop in crude oil. Meanwhile, a House panel took a step to begin rolling back Dodd-Frank reforms, all helping to offset the Federal Reserve's signaled confidence in the economy.
The Dow Jones Industrial Average , which had traded down by as many as 110 points, was down 29 points, or 0.1%, to 20,929, led lower by shares of Chevron Corp. (CVX), down 2.2%, and Caterpillar Inc.(CAT), with a 2% decline.
The S&P 500 index declined less than 1 point to 2,388, as six out of 11 sectors traded in negative territory with energy and telecom shares leading decliners. Earlier, the index had been down as many as 8 points.
The Nasdaq Composite Index was down 1 point at 6,072, following an 18-point deficit.
The slide for stocks intensified intraday, falling to session lows, after the House Financial Services panel voted to begin rolling back provisions of the Dodd-Frank financial reforms (http://www.marketwatch.com/story/house-panel-passes-republican-measure-gutting-dodd-frank-reforms-2017-05-04).
Major indexes opened higher but quickly declined as crude-oil prices unraveled. However, they subsequently recovered from that weakness to trade flat, a sign of how investors continue to search for direction and catalysts to drive longer-term action.
"The vote of the [Financial] Choice Act was the stimulus for the last drop we saw," said Joe Saluzzi, co-head of equity trading at Themis Trading. While usually bearish, Saluzzi said he sees real momentum as the market has tended to recover from knee-jerk drops.
Facebook Inc.(FB), one of the largest U.S. companies by market capitalization, fell 0.8% despite posting better-than-expected (http://www.marketwatch.com/story/facebook-shares-rise-after-first-quarter-revenue-beat-2017-05-03) earnings and revenue late Wednesday. The drop was seen as related to the stock's recent outperformance; it is up nearly 30% thus far this year.
"Valuations are lofty, but companies are mostly delivering what people had been expecting, and those [analyst] estimates were pretty high to begin with. That is why we continue to muddle around these high levels in the market," said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group.
Energy shares weighed on the broader market, with the sector (XLE) down 2.3%, falling sharply alongside a 4.5% drop in crude oil , which took prices to their lowest level since November (http://www.marketwatch.com/story/oil-prices-sink-to-lowest-levels-since-november-2017-05-04).
Crude sank on expectations for a recovery in Libyan production, along with rising U.S. output, both of which would add to the market's persistently high levels of supply. Among the most active names, Exxon Mobil Corp.(XOM) shares fell 1.2%, ConocoPhillips(COP) lost 2.5% and Occidental Petroleum Corp. (OXY) shed 2.9%.
"Oil has been in correction mode, which is weighing on the market. Futures had been higher because of positive sentiment here and in Europe, but the energy weakness changed that," Sosnick said.
The Fed statement, released on Wednesday two hours before the market's close, said the central bank's policy panel "views the slowing in growth during the first quarter as likely to be transitory," deploying unusually dismissive language (http://www.marketwatch.com/story/fed-holds-interest-rates-steady-dismisses-first-quarter-slump-as-transitory-2017-05-03). The Fed also left interest rates unchanged, as had been widely expected.
Equities had also been supported by an apparent easing of geopolitical tensions abroad, with European stocks higher after markets-friendly French presidential candidate Emmanuel Macron (http://www.marketwatch.com/story/emmanuel-macron-5-things-to-know-about-the-man-poised-to-be-frances-president-2017-04-24) weathered a televised debate Wednesday night and appeared to remain on track to win in Sunday's runoff election against euroskeptic Marine Le Pen.
See:Brace for market mayhem if Le Pen unexpectedly wins French presidency (http://www.marketwatch.com/story/brace-for-market-mayhem-if-le-pen-unexpectedly-wins-french-presidency-2017-05-04)
Europe's main stock benchmark was on track to close near its highest level since August 2015 (http://www.marketwatch.com/story/european-stocks-flirt-with-almost-21-month-high-after-earnings-deluge-2017-05-04), getting a lift from well-received earnings and Macron's debate performance (http://www.marketwatch.com/story/macron-le-pen-square-off-in-debate-ahead-of-sundays-french-election-2017-05-03).
Economic news: In the latest economic data, first-time jobless claims fell sharply in the latest week (http://www.marketwatch.com/story/us-jobless-claims-fall-sharply-in-latest-week-2017-05-04), dropping a larger-than-expected 19,000 in the latest sign of strength in the labor market. Separately, U.S. productivity fell 0.6% in the first quarter (http://www.marketwatch.com/story/us-productivity-slumps-in-first-quarter-2017-05-04); analysts had forecast no change.
Check out:
There are no Fed officials scheduled to speak today.
Individual movers:Tesla Inc.(TSLA) lost 4.7% after the maker of electric cars late Wednesday revealed a wider-than-expected adjusted loss (http://www.marketwatch.com/story/tesla-shares-higher-after-wider-loss-revenue-beat-2017-05-03), though its quarterly revenue beat forecasts.
Read: Elon Musk says robot software will make Tesla worth as much as Apple (http://www.marketwatch.com/story/elon-musk-robot-software-will-make-tesla-worth-as-much-as-apple-2017-05-04)
Dunkin' Brands Group Inc.(DNKN) rose 0.4% after the doughnuts seller posted (http://www.marketwatch.com/story/dunkin-brands-falls-15-premarket-after-revenue-miss-2017-05-04) a larger-than-expected rise in adjusted profit, but weaker-than-anticipated revenue.
Avon Products Inc.(AVP) reported a surprise loss (http://www.marketwatch.com/story/avon-products-reports-surprise-loss-while-sales-rise-as-expected-2017-05-04), sending shares down 16%.
Other markets:Gold futures (http://www.marketwatch.com/story/gold-tumbles-1-after-fed-signals-confidence-in-the-us-economy-2017-05-04) tumbled 1.5% and were on pace for their lowest settlement since mid-March.
See:Why now may be a good time to buy gold and silver (http://www.marketwatch.com/story/why-now-may-be-a-good-time-to-buy-gold-and-silver-2017-05-03)
And read:Gold investment demand falls 34%, but WGC says it was still 'robust' (http://www.marketwatch.com/story/gold-investment-demand-falls-34-but-wgc-says-it-was-still-robust-2017-05-04)
Asian markets finished mostly with losses, though Korea's benchmark scored a record close (http://www.marketwatch.com/story/record-high-for-korean-stocks-as-other-asian-markets-slip-2017-05-03). A key dollar index edged down 0.4%.
--Victor Reklaitis in London contributed to this article.
(END) Dow Jones Newswires
May 04, 2017 13:25 ET (17:25 GMT)