Stock Market News for May 05, 2017 –

Benchmarks mostly ended flat on Thursday amid drop in oil prices and the first steps taken by House Republicans to repeal Obamacare. Oil prices took a beating on anticipation of a rise in Libyan crude output, eventually dragging energy shares down. Meanwhile, Republicans garnered enough support to push through the healthcare bill in the House of Representatives that helped insurers and hospital stocks move north. At the same time, the House of Financial Services made significant progress on overhauling the Dodd-Frank law.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) declined 6.43 points to close at 20,951.47. The S&P 500 rose 0.1% to close at 2,389.52. The tech-laden Nasdaq Composite Index advanced 0.1% to close at 6,075.34. The fear-gauge CBOE Volatility Index (VIX) declined 1.8% to 10.49. A total of around 7.8 billion shares were traded on Thursday, higher than the last 20-session average of 6.6 billion shares. Decliners outnumbered advancing stocks on the NYSE by a 1.79 to 1 ratio.   

Oil Prices Drop

Oil prices declined on Thursday, marking its lowest close since late November. Oil prices fell following expectations of a rise in Libyan crude output and increasing U.S. output. According to Energy Information Administration (EIA) data, weekly domestic crude production increased by 28,000 barrels to 9.293 million barrels a day for the week ended April 28.

Fall in oil prices dragged down energy shares, which ultimately had an adverse impact on the broader market. WTI crude prices fell by $2.30, or 5.1%, to $45.52 a barrel. The broader Energy Select Sector SPDR (XLE) declined 1.8%, emerging as the worst performing sector of S&P 500. Some of the key holdings of the energy sector in the S&P 500 including Exxon Mobil Corp (XOM Free Report) , ConocoPhillips (COP Free Report)  and Occidental Petroleum (OXY Free Report) declined by 1.3%, 2.5% and 3.6% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Obamacare Repeal

On Thursday, Republicans took a significant first step toward repealing the Obamacare by successfully passing a new healthcare bill through the House of Representatives. Although, no Democrats voted to back the bill, Republicans were able to pass the American Health Care Act by a thin margin of 217-213 votes. In this manner, Republicans secured adequate support to pass the Healthcare bill through the House of Representatives, which now awaits approval from the Senate. .

Trump’s health care reform bill is expected to provide coverage to only 110,000 people out of a total of 2.2 million people who presently hold insurance and have pre-existing conditions. Supporters of the bill believe that removing protection from large numbers of people who have pre-existing medical conditions would lead to a decrease in insurance premiums for others.

Hospitals and insurance companies’ shares gained following the passage of the healthcare bill through the House of Representatives. Shares of leading insurers including UnitedHealth (UNH Free Report) and Humana (HUM Free Report) rose 0.9% and 2.2% respectively.

Dodd-Frank Overhaul

The House Financial Services panel on Thursday approved legislation to repeal some of the major sections of the Dodd-Frank financial reform law. The Senate will now decide whether The Financial Choice Act will ultimately become law. According to Republicans the Dodd-Frank legislation is arresting economic growth as it prohibits banks from lending to small businesses. 

Economic Data

As per the Labor Department, seasonally adjusted initial jobless claims decreased to 238,000 in the week ending April 29. The figure saw a decline of 19,000 from the previous week’s unrevised level of 257,000. However, the four week moving average was recorded at 243,000, an increase of 750 from the previous week’s unrevised average.

Meanwhile, as per the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, the trade deficit in March decreased to $43.7 billion, fell $0.1 billion from $43.8 billion in February.

On the other hand, U.S. productivity fell at a 0.6% annual pace in the first quarter of 2017. This was the sharpest rate of decline for the entire year.

Stocks that made Headlines

Infinera Q1 Loss Lower than Expected, Revenues Top

Leading optical transport network developer, Infinera Corp. (INFN Free Report) reported strong financial results in the first quarter of 2017 wherein both the top line and bottom line surpassed the Zacks Consensus Estimate. (Read More)

Motorola Earnings and Revenues Beat Estimates in Q1

Motorola Solutions Inc.’s (MSI Free Report) first-quarter 2017 earnings (excluding 19 cents from non-recurring items) of 64 cents per share comfortably beat the Zacks Consensus Estimate of 50 cents. (Read More)

Marathon Oil Q1 Loss Narrower than Expected, View Up

Houston, TX-based leading upstream energy firm Marathon Oil Corporation (MRO Free Report) posted first-quarter adjusted loss of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 8 cents. (Read More)

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