U.S. stocks close lower as oil slides, but post weekly gains
U.S. stocks ended near session lows on Friday, with investor sentiment hit by a renewed slide in crude-oil prices.
Reports that major oil producers are not likely to reach an agreement to freeze production at a meeting this weekend resulted in the largest one-day loss for oil futures since mid-July.
“Crude oil is just getting hammered and that’s just really taking the market down,” said Colin Cieszynski, senior market analyst at CMC Markets.
The main indexes posted a second straight weekly gain, however, thanks to a Fed-induced rally earlier this week.
The S&P 500 fell 12.49 points, or 0.6%, to 2,164.69, with a 1.3% tumble in the energy sector, leading losses in the large-cap benchmark. Transocean Ltd. down 5.7%, was the worst performer in the S&P 500. The index rose 1.2% over the week.
Meanwhile, The Dow Jones Industrial Average declined 131.01 points, or 0.7%, to 18,261.45 with all but three of the 30 blue-chip components finishing in negative territory. Apple Inc. shares, off 1.6%, were also contributing to negative sentiment following reports that Japanese antitrust regulators were considering taking action against the Cupertino, Calif.-based company. The blue-chip index posted a 0.8% gain over the week.
“Anytime Apple sneezes the rest of the market catches a cold,” Cieszynski said.
The Nasdaq Composite Index dropped 33.78 points, or 0.6%, to 5,305.75, backing off two straight days of record closes. Bucking the general trend, shares of Twitter Inc. soared amid reports that acquisition talks for the microblogging company had intensified. The tech-heavy index gained 1.2% over the week.
Reports on Friday that Saudi Arabia views a planned confab of members of the Organization of the Petroleum Exporting Countries and other top oil-producers set for next week in Algeria, as merely a consultation and doesn’t expect a concrete pact to be reached, deflated crude futures prices, which had benefited from the prospects of an agreement.
Earlier, the catalyst for the downturn was a weaker than expected reading of manufacturing activity, which pointed to a slowdown in growth this month.
A preliminary reading of U.S. manufacturing purchasing managers index fell to 51.4 in September compared with 52 in August and its lowest reading since June. A reading above 50 indicates an expansion in activity.
Markets rallied earlier in the week as traders cheered the Federal Reserve’s latest policy announcement, sending the Nasdaq Composite to consecutive record closes. The Fed on Wednesday stood pat on interest rates, but also indicated confidence in the U.S. economy and signaled a rate rise could come by year’s end.
Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, attributed Friday’s moves to investors cashing out of positions after a relief rally for stocks following dovish monetary-policy decisions by the Fed and Bank of Japan.
“This is mostly just a little bit of profit-taking after we had two pretty good up days and we really haven’t even given all of yesterday’s moves back, ” Frederick said.
He also said repositioning ahead of the weekend with the oil-producer meeting ahead is also at play.
Other markets: Oil futures dropped sharply as doubts intensified about an oil output pact, weighing on energy shares. European stocks settled lower, while Asian markets closed mixed. The ICE U.S. Dollar Index was little-changed, and gold prices finished modestly lower, snapping a four-day win streak, but booking its best weekly gain since July.
Economic news: A Baker Hughes report showed active U.S. rigs drilling for oil climbing by 2 to 418 rigs this week. They have now posted increases in 12 out of the last 13 weeks.
On the Fed front, Boston Fed President Eric Rosengren said recession risks have grown because of the Fed’s reluctance to raise interest rates. Rosengren earlier this week dissented from the Fed’s decision to hold rates steady, voting instead for a rise.
Individual movers: Shares of Twitter soared 22% amid intensifying talk of a takeover, possibly by companies including Salesforce.com Inc. or affiliates of Alphabet Inc. CNBC reported Friday.
Salesforce.com shares fell 5.6%, among the worst performers among the S&P 500, while Alphabet Inc. share closed 0.1% lower.
Shares in Yahoo Inc. fell 3.1% after the ailing internet pioneer disclosed a massive security breach affecting at least 500 million users.
Facebook Inc. dropped 1.6% following a report that big ad buyers are upset that the tech giant vastly overestimated average viewing time for video ads on its platform.
Shares of Endo International PLC surged 15% after the company appointed Paul V. Campanelli as president and chief executive officer, effective immediately.
Bats Global Markets Inc. surged 19% after a report that CBOE Holdings Inc. has been in talks to acquire the exchange operator.
Source: MarketWatch
