S&P 500 falls as oil tanks more than 2% again
U.S. stocks inched mostly lower Wednesday as oil prices failed to rebound from a sharp decline during the previous session.
The S&P 500 dropped 0.15 percent as energy stocks fell 1.6 percent to lead decliners. The sector briefly erased losses after bullish supply data from the oil market was released.
The Energy Information Administration said Wednesday that U.S. crude inventories decreased by 2.5 million barrels, lifting energy stocks and oil prices.
“The bulls will tell you it’s a supply issue, but look no further than China and you’ll see lesser demand,” said Nick Raich, CEO of The Earnings Scout, noting China’s Shanghai composite is lagging other major stock indexes.
Crude futures for August delivery pulled back 2.7 percent to trade at $42.35 a barrel. Oil prices fell more than 2 percent and entered a bear market Tuesday.
“If we break below $40, all bets are off and the threat of inflation would be over,” said Peter Cardillo, chief market economist at First Standard Financial.
Oil was also on track to post its worst first-half performance since 1997.
Crit Thomas, global market strategist at Touchstone Investments, said he is not overly concerned about oil’s latest pullback, however. “We’ve already seen energy underperform for most of the year and that hasn’t derailed the broader market,” he said.
The Dow Jones industrial average slipped 56 points, with Caterpillar contributing the most losses. UnitedHealth and Merck, however, helped cap losses. The Nasdaq composite outperformed, rising 0.5 percent as biotechnology stocks spiked higher.
The major U.S. equity indexes closed lower on Tuesday as energy stocks faced pressure from oil’s sharp fall, but the Dow managed to hit a record intraday high.
Stocks have been on a tear this year, with the S&P rising more approximately 9 percent, largely led by information technology. The tech sector has jumped nearly 20 percent this year as shares of large-cap stocks in the space have risen sharply. Tech’s rise has also boosted the Nasdaq composite, which is up 15 percent year to date.
In economic news, mortgage applications rose 0.6 percent as interest rates remained low. Existing homes sales unexpectedly rose in May to the third highest monthly level in a decade, up 1.1 percent to a seasonally adjusted rate of 5.62 million units.
Treasury yields traded slightly higher, with the 10-year Treasury yield near 2.17 percent.
Overseas, European equities traded mostly lower, with the pan-European Stoxx 600 index slipping 0.26 percent.
Source: CNBC
