Crude-oil futures drop 0.5%, after trading 1% higher
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U.S. stocks reversed early gains on Monday and were bouncing around in early trade as oil prices continued their bearish slump and as the technology sector pitched into the red.
The S&P 500 was up 1 point, or less than 0.1%, at 2,412, with so-called defensive sectors, such as utilities and telecoms leading. The technology sector, which was trading up 0.7% in early trade, reversed course to trade off 0.5%. Volatile crude-oil prices also pressured the overall market.
“Oil is the primary culprit in markets paring gains this morning. We are in a state where the market is playing a game: on the one hand investors like stocks because there are no alternatives with bond yields so low, but they are also concerned about the economy. Every time oil sells off, fears about demand and deflation resurface,” said Ian Winer, director of equity trading at Wedbush Securities.
The benchmark S&P 500 is about 9% over the first half of the year, with some analysts suggesting that the second half will likely be positive as well.
“When the 500’s first-half price gain was between 7% and 12%…the market went on to record an average price rise of 5.1% during the second half and posted a positive performance an above-average 87% of the time,” wrote Sam Stovall, chief investment strategist at CFRA, a market research firm.
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Stovall’s calculations would put the S&P 500 at 2,565 by the end of the year.
“While this forward six-month level for the S&P 500 approximates our 12-month target, based on current EPS and inflation projections, history implies that we may be underestimating the market’s rest-of-year potential,” Stovall said.
The Nasdaq Composite Index was down 12 points, or 0.2%, to 6,252.
The Dow Jones Industrial Average gave up more than 80 points, to trade 5 points, or less than 0.1% higher at 21,399. Wal-Mart Stores Inc.(WMT) was the best-performing stock among blue-chip companies, up 1%.
Earlier, investors appeared to have shrugged off weaker-than-expected durable-goods orders with equity-index futures maintaining gains, though both the dollar and Treasury yields declined after the release.
Durable-goods orders (http://www.marketwatch.com/story/orders-for-durable-goods-backslide-again-2017-06-26) slipped 1.1% last month following a similar drop in April, disappointing economists who expected a smaller decline.
Other stock movers: Shares of Yum! Brands Inc.(YUM) advanced 0.7% after Australian company Collins Foods Ltd. (CKF.AU) said it is buying 28 KFC restaurants from the fast food-chain operator (http://www.marketwatch.com/story/yum-brands-rises-18-premarket-after-sale-of-28-kfc-outlets-to-collins-foods-2017-06-26).
Facebook Inc.(FB) advanced 0.9% following news that the social-networking giant is talking to Hollywood studios and agencies about producing TV-quality shows (http://www.marketwatch.com/story/facebook-in-talks-with-hollywood-to-produce-tv-quality-shows-2017-06-26), according to people familiar with the talks.
U.S.-listed shares of Nestlé SA(NESN.EB) jumped 4% after news that billionaire activist investor Daniel Loeb’s Third Point LLC hedge fund has taken a $3.5 billion stake in the consumer-products giant (http://www.marketwatch.com/story/daniel-loebs-hedge-fund-takes-35b-nestle-stake-2017-06-25).
Economic news:Orders for durable goods (http://www.marketwatch.com/story/orders-for-durable-goods-backslide-again-2017-06-26) fell by the largest amount in May, dropping for the second month in a row and suggesting that an early-year surge has faded.
The Chicago Fed national activity index fell to negative 0.26 in May from 0.57 in April.
See: MarketWatch’s Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic).
A quarterly mortgage sentiment survey from Fannie Mae showed U.S. lenders are preparing for tougher times ahead and planning to relax lending standards, according to Reuters.
In central bank news, San Francisco Fed President John Williams said at a speech in Australia that gradual hikes in interest rates are needed to avoid overheating the U.S. economy (http://www.marketwatch.com/story/feds-williams-says-gradual-rate-hikes-are-needed-for-growth-2017-0). Separately at Salzburg in Austria, Fed governor Jerome Powell said he sees room to ease some banking rules in the U.S (http://www.marketwatch.com/story/feds-powell-reiterates-his-call-for-relaxing-some-banking-regulations-2017-06-26).
Other markets:Asian stock markets closed higher (http://www.marketwatch.com/story/asian-markets-gain-thanks-to-tech-stocks-and-commodities-2017-06-25) across the board, helping European stocks open higher as well (http://www.marketwatch.com/story/european-stocks-propelled-higher-by-italian-banks-nestle-shares-2017-06-26).
The dollar turned lower against the euro, after weaker economic data, trading at $1.1218 compared with $1.1194 late Thursday and trimmed gains against the Japanese yen, trading at Yen111.42 vs Yen111.27. The yield on the 10-year Treasury note fell 2 basis points to 2.13%, near its lowest levels since last November. Meanwhile gold stumbled nearly 1%.
(END) Dow Jones Newswires
June 26, 2017 11:17 ET (15:17 GMT)