Oil slumps 5%, but banks lead stocks slightly higher
Banks and other financial companies led U.S. stocks slightly higher Wednesday, snapping the market’s two-day losing streak.
Energy companies slid, though, as U.S. crude oil had its biggest single-day drop in nearly three months.
Trading was mostly subdued, with the major indexes trading in a narrow range as investors sized up the latest company earnings and looked ahead to Thursday’s testimony from former FBI Director James Comey, part of a congressional investigation into Russia’s possible election meddling.
“From an investor perspective, it would be nice to get another potential distraction out of the way and move toward the threefold mandate of the Trump administration — deregulation, reduced taxes and improved infrastructure — because they have been delayed, delayed and delayed,” said Erik Davidson, chief investment officer for Wells Fargo Private Bank.
The Standard & Poor’s 500 index rose 3.81 points, or 0.2%, to 2,433.14. The Dow Jones industrial average rose 37.46 points, or 0.2%, to 21,173.69. The Nasdaq composite index climbed 22.32 points, or 0.4%, to 6,297.38. The Russell 2000 index of small-company stocks ticked up 1.78 points, or 0.1%, to 1,396.67.
The major indexes remain slightly below record highs set late last week.
Comey’s appearance before the Senate intelligence committee will be his first public comments since President Trump abruptly ousted him May 9. The former director’s associates say Trump asked Comey if he could back off an investigation into Michael Flynn, who was fired as national security advisor because he misled the White House about his ties to Russia.
Investors will try to glean how the outcome of the hearing may play into the administration’s efforts to forge ahead with Trump’s pledge to cut taxes, increase infrastructure spending and implement other business-friendly policies.
Financials were the biggest gainers in the S&P 500, rising 0.8%. The sector is up 23% this year.
Speculation that the Federal Reserve may raise its key interest rate at a meeting of policymakers next week probably helped lift the sector Wednesday, Davidson said. Higher interest rates enable banks and credit card issuers to charge more for loans, which boosts profits.
JPMorgan Chase shares rose 1.2% to $83.91. American Express rose 1.2% to $79.81.
Oil futures fell sharply after a report showed that U.S. crude stockpiles grew by 3.3 million barrels last week. Experts had expected stockpiles to shrink by 3.5 million barrels. Benchmark U.S. crude slid 5.1% to $45.72 a barrel. Brent crude, used to price international oils, fell 4.1% to $48.06 a barrel.
The steep slide in oil prices sent several oil and gas drilling companies lower. Newfield Exploration was the biggest decliner in the S&P 500, dropping 7% to $28.90. Helmerich & Payne fell 6% to $50.08. Rig operator Transocean declined 5.6% to $8.59.
Investors also kept an eye on company earnings Wednesday.
Carvana jumped 32.8% to $12.66 after the online seller of used cars posted its first quarterly results as a public company and issued a forecast that exceeded Wall Street’s expectations.
Duluth Holdings slumped 18.6% to $16.75 after the clothing and tools supplier reported disappointing earnings.
Ambarella sank 10.2% to $53.60. The video-compression chipmaker had a strong first quarter, but investors were concerned about weak sales of chips that go into drones.
Bond prices fell. The 10-year Treasury yield rose to 2.18% from 2.15%.
The dollar rose to 109.83 yen from 109.54 yen. The euro weakened to $1.1252 from $1.1271.
Among metals, gold slipped $4.30 to $1,293.20 an ounce. Silver fell 9 cents to $17.62 an ounce. Copper held steady at $2.55 a pound.
In other energy futures trading, wholesale gasoline fell 6 cents, or 4.1%, to $1.49 a gallon. Heating oil fell 5 cents, or 3.4%, to $1.42 a gallon. Natural gas fell 2 cents to $3.02 per 1,000 cubic feet.
London’s FTSE 100 slid 0.6% as Thursday’s British elections neared. Traders were also looking ahead to a Thursday policy meeting of the European Central Bank. Germany’s DAX and France’s CAC 40 each slipped 0.1%. Tokyo’s Nikkei 225 and Sydney’s S&P-ASX 200 were flat. Hong Kong’s Hang Seng fell 0.2%. Seoul’s Kospi shed 0.4%.
UPDATES:
2:40 p.m.: This article was updated with closing prices, context and analyst comments.
This article was originally published at 7:55 a.m.
