Stocks slip as energy companies slide
U.S. stocks took small losses Friday to end a quiet week of trading. Energy companies fell as a rally in oil prices faded and investors continued to sell the traditionally safer assets they favored earlier this year. Technology and materials companies made small gains.
Stocks were lower all day. Although U.S. oil prices rose for the seventh day in a row, investors don’t appear to expect further gains and they sold energy company shares. Bond prices fell and yields climbed. The Dow Jones industrial average dropped more than 100 points in early trading, but those losses shrank as technology companies and chemical makers added to the big gains they’d made in recent months.
Although stocks haven’t made many major moves this summer and the Standard & Poor’s 500 index was flat this week, there are signs investors feel comfortable enough to take bigger risks.
Karyn Cavanaugh, senior market strategist for Voya Investment Strategies, said investors recognize that the Federal Reserve and other central banks are keeping the stock market stable. So investors are putting more money into energy, materials and tech stocks instead of the companies they turned to during the market turmoil at the start of this year.
“Central banks continue to step in to absorb the risk,” Cavanaugh said. Investors “don’t need the utilities and telecoms anymore.”
The Dow fell 45.13 points, or 0.2%, to 18,552.57. The S&P 500 slipped 3.15 points, or 0.1%, to 2,183.87. The Nasdaq composite edged down 1.77 points, or less than 0.1%, to 5,238.38. The Nasdaq rose for the eighth week in a row, although the gain was just 0.1%.
U.S. crude rose 30 cents to $48.52 a barrel in New York. U.S. oil has climbed 17% in its seven-day streak, but its price has stayed between $40 and $50 a barrel for about four months, and with an enormous glut of oil on the market, it may not rise much further. Brent crude, used to price international oils, slipped 1 cent to $50.88 a barrel in London.
Chevron fell 1.2% to $102.32 and Exxon Mobil retreated 1.2% to $87.80.
Technology companies made small gains. Applied Materials jumped 7.1% to $29.64 after the manufacturer of chipmaking equipment disclosed new orders and a contract backlog that were much stronger than analysts had forecast. Security software maker Symantec rose 2.6% to $23.72. Apple, which is trading around four-month highs, rose 28 cents to $109.36.
Bond prices are down and yields are up after hitting record lows a month ago. On Friday the yield on the 10-year Treasury note jumped to 1.58% from 1.54%. The dollar also recovered some of its recent losses, rising to 100.24 yen. On Thursday the currency finished at 99.98 yen, its first time below 100 yen since October 2013. The euro slipped to $1.1324 from $1.1354.
Retailers did fairly well, and that limited the losses for consumer companies. Foot Locker jumped 11% to $68.49 after the shoe store chain reported stronger results than analysts expected. Nike rose 3% to $58.90. Discount retailer Ross Stores climbed 3.5% to $65.06 after the discount retailer issued a strong second-quarter report and raised its profit projections.
Beauty products maker Estee Lauder, however, skidded 3.5% to $91.73 after its profit forecast for the current quarter and the new fiscal year fell far short of estimates.
Emerson Electric agreed to buy Pentair’s valves and controls business for $3.15 billion. Pentair acquired that business from Tyco International in 2012 as part of a larger deal between those companies and said it had $1.8 billion in revenue in 2015. Emerson stock fell 3.1% to $52.98 and Pentair slid 1.1% to $65.79.
Farm equipment maker Deere leaped 13.5% to $87.32, its biggest gain since the end of 2008, after it posted strong results and raised its outlook for the year. The company has been cutting costs as farmers struggle with smaller profits on corn and soybeans thanks to large harvests.
Wholesale gasoline rose 2 cents to $1.51 a gallon. Heating oil rose 4 cents to $1.53 a gallon. Natural gas fell 9 cents to $2.58 per 1,000 cubic feet.
Gold fell $11 to $1,346.20 an ounce. Silver fell 42 cents, or 2.1%, to $19.32 an ounce. Copper remained at $2.17 a pound.
France’s CAC 40 shed 0.8% and Germany’s DAX lost 0.6%. The FTSE in Britain slipped 0.1%. Japan’s benchmark Nikkei 225 index advanced 0.4% as the yen got a bit weaker, easing pressure on shares of the country’s export manufacturers. The yen’s recent rise has made Japanese exports more expensive and complicated efforts to revive growth. South Korea’s Kospi edged up less than 0.1% and Hong Kong’s Hang Seng shed 0.4%.
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UPDATES:
2:20 p.m.: This article was updated with closing prices and additional details.
8 a.m.: This article was updated with additional details.
This article was originally published at 7:20 a.m.
