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Stocks end nearly flat; Tropical Storm Harvey affects insurers and energy companies

Stocks end nearly flat; Tropical Storm Harvey affects insurers and energy companies
The New York Stock Exchange. (Seth Wenig / Associated Press)

U.S. stocks finished little changed Monday as investors focused on the effects of Tropical Storm Harvey. Insurance companies and oil drillers stumbled while refineries rose along with gasoline prices.

With August coming to a close, Monday was one of Wall Street's quietest days of the year. Biotech drug companies rose after hepatitis C and HIV drug maker Gilead Sciences agreed to buy cancer drug maker Kite Pharma for $11.9 billion. Travel booking website Expedia tumbled as investors expected the company's chief executive, Dara Khosrowshahi, to leave Expedia and become CEO of ride-hailing company Uber.

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Lacking other major corporate or economic news, investors mostly focused on Harvey, initially a hurricane before becoming a tropical storm, which continues to hit parts of the Gulf Coast with historically heavy rains. Large parts of the energy and petrochemical industries are based there, and companies with a lot of stores in the area stand to lose business. Although gas-price spikes will be temporary, other effects of the storm will last years.

"There will be ripple effects that everyone is going to feel," said Jack Ablin, chief investment officer for BMO Capital Markets. He said that could include higher insurance premiums, as the storm is likely to cause tens of billions of dollars in flood damage. Ablin added that the storm might also affect interest rates, as the Federal Reserve might hesitate to raise rates if officials think the storm will slow the economy significantly.

The Standard & Poor's 500 index ticked up 1.19 points, or less than 0.1%, to 2,444.24. The Dow Jones industrial average slipped 5.27 points, or less than 0.1%, to 21,808.40. The Nasdaq composite rose 17.37 points, or 0.3%, to 6,283.02. The Russell 2000 index of smaller-company stocks rose 4.78 points, or 0.3%, to 1,382.23. Most of the stocks on the New York Stock Exchange fell.

The tropical storm — which made landfall in Texas on Friday when it was still a hurricane — is expected to continue for days, and the National Weather Service says some parts of Houston and its suburbs could get as much as 50 inches of rain. The weather shut down much of Texas' oil and gas industry, and S&P Global analysts said about 2.2 million barrels per day of refining capacity was down or being shut down by Sunday.

Shares of Helmerich & Payne, an oil and gas well drilling contractor, fell 2.9% to $43.49.

Benchmark U.S. crude fell $1.30, or 2.7%, to $46.57 a barrel in New York. Brent crude, the international standard, fell 52 cents, or 1%, to $51.89 a barrel in London.

Wholesale gasoline futures climbed 5 cents, or 2.7%, to $1.71 a gallon, and refining companies climbed, as they stand to benefit from higher gasoline prices. Marathon Petroleum stock rose 1.5% to $52.52.

Insurance companies declined as investors worried that flooding from Harvey will lead to big losses. Travelers slumped 2.6% to $123.23. Progressive fell 2.3% to $47.31.

Shoe retailer DSW slid 5% to $19.04. Sporting goods company Finish Line fell 2.3% to $10.42. Boot Barn retreated 2.8% to $8.33. Citi Investment Research analyst Kate McShane noted that all three companies have large numbers of stores in Texas.

Some companies that may play a role in cleanup efforts after the storm traded higher. Those included environmental services company Clean Harbors, which rose 3.1% to $52.98.

Gilead Sciences agreed to buy Kite Pharma for $11.9 billion, or $180 a share. Kite is studying treatments that can reprogram a patient's immune cells to attack tumors, and it hopes to win approval this year for a blood cancer treatment. Its stock jumped 28% to $178.05. Gilead advanced 1.2% to $74.69.

Ixys jumped 40.4% to $22.40 after the chipmaker agreed to be bought by circuit protection manufacturer Littelfuse for $23 a share, or about $750 million.

Gold rose $17.40, or 1.3%, to $1,315.30 an ounce, its highest price in 11 months. Silver rose 39 cents, or 2.3%, to $17.44 an ounce. Copper ticked up 3 cents, or 1%, to $3.06 a pound.

In other energy trading, heating oil rose 1 cent to $1.64 a gallon. Natural gas rose 3 cents to $2.93 per 1,000 cubic feet.

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The euro rose to $1.1979 from $1.1888, bringing it to its highest level since the beginning of 2015. The European currency has been climbing recently because investors feel the European Central Bank isn't going to take steps to keep the euro from getting stronger. That would make exports from European countries more expensive in other markets.

The dollar inched down to 109.09 yen from 109.24 yen.

Bond prices edged up. The yield on the 10-year Treasury note slipped to 2.16% from 2.17%.

The CAC 40 in France fell 0.5% and the DAX in Germany sank 0.4%. British markets were closed for a public holiday. Japan's benchmark Nikkei 225 index took a negligible loss, and the South Korean Kospi lost 0.4%. The Hang Seng in Hong Kong rose less than 0.1%.

UPDATES:

2:10 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 7 a.m.

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