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Stocks opened lower Thursday, despite some positive economic news and a continued surge in oil prices.
The Dow Jones industrial average fell 0.2% while the Nasdaq and S&P 500 dropped 0.3%.
The Dow headed into Thursday’s session toting a 0.3% loss so far for the week. The Nasdaq was up 0.5%, while the S&P 500 held a narrow gain and was trading less than 0.5% below its March 1 high.
Early Movers: Merck, Snap, NetEase, Straight Path
On the Dow, Merck (MRK) rose 2% at the open. The Kenilworth, N.J.-based drugmaker announced late Wednesday the Food and Drug Administration had approved its Keytruda as part of a chemotherapy regimen to treat certain forms of lung cancer. Merck shares climbed back above their 10-week moving average, and continued building the right side of a two-month base pattern.
Among other blue chips, Caterpillar (CAT) climbed more than 1% after Bank of America upgraded the stock to buy from neutral, and raised its price target to 120 from 105.
In earnings action, Whole Foods Market (WFM) and ExOne (XONE) posted early gains after reporting results. Ctrip.com International (CTRP) and Symantec (SYMC) — two stocks that pushed to new highs Wednesday — both fell hard in premarket trade after their reports.
But Snap (SNAP) took the headlines, diving more than 20% after reporting a more severe loss than expected in its first quarterly report as a public company late Wednesday. At Thursday’s low, the stock came back almost to its IPO price of 17 a share.
China-based NetEase (NTES) jumped 3% after its 53% gain in Q1 earnings gain and 61% rise in revenue squarely beat analysts estimates. The IBD 50 stock climbed above its 10-week moving average as it works on the right side of a base.
Straight Path Communications (STRP) skidded 20% at the open, after confirming it had accepted a takeover bid from Verizon (VZ) at $184 per share. The $3.1 billion deal ends a bidding war between Verizon and AT&T (T) that had driven Straight Path shares up 576% for the year through Wednesday. Verizon and AT&T were flat at Thursday’s open.
Oil Continues Rally, Jobless Claims Decline
Prices paid by producers rose 0.5% in April, the Labor Department estimated, up from a 0.1% decline in March in a move much bigger than the 0.2% gain expected by economists. Core prices, minus food and energy, rose 0.4%, compared to a no change reading in March and vs. consensus expectations for a 0.2% gain.
First-time unemployment claims eased slightly, to 236,000, in the week ended May 6. The prior week’s tally was 238,000 claims, and economist had projected an increase to 244,000 new claims.
Oil prices continued their bounce begun Wednesday, spurred by data showing a sharp reduction in weekly stockpiles. West Texas Intermediate pulsed 1.3% higher early Thursday, climbing to just below $48 a barrel and up about 4% so far for the week. Gold edged up 0.2% to $1,221 an ounce. The dollar eased as bonds climbed, trimming the 10-year yield by 2 basis points to 2.39%.
New York Federal Reserve Bank President William Dudley, speaking to a group at India’s Bombay Stock Exchange at 6:30 a.m. ET, detailed his view that protectionist trade policies may provide short-term benefits, but have a broad negative impact on the longer-term economy.
“Protectionism can have a sirenlike appeal,” Dudley was reported saying by Reuters, but in the longer term “it would almost certainly be destructive to the economy overall.”
Markets were tightly mixed in Europe after the Bank of England voted to hold its key interest rate at a record low 0.25%, citing data showing the U.K. economy slowed to 0.3% growth in the first quarter. The CAC 40 in Paris and Frankfurt’s DAX each dropped 0.1%, while the FTSE 100 in London managed a narrow gain.