Energy company stocks and oil prices took their biggest losses in months Friday on reports that OPEC countries plan to produce more oil soon. Stock indexes finished an indecisive week with small losses.
U.S. crude oil sank 4% after multiple reports indicated that Russia and OPEC could start producing more oil soon. They cut production at the start of 2017 after a big buildup in supplies that had pushed down prices. In November they extended that cut through the end of 2018, but according to reports this week, they might agree to start raising production in June. U.S. crude finished at a three-year high Monday and has fallen 6% since then.
The drop in the price of oil has meant sharp declines for energy companies, but airline stocks rose as investors anticipated lower fuel costs. Bond yields declined again, which hurt banks but helped stocks that pay dividends, such as household goods makers.
Wall Street also focused on quarterly results from retailers. Gap plunged after it said its namesake brand is still struggling. Foot Locker soared after it said sales of premium shoes improved.
Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said energy companies and oil prices had made big gains lately and were due to slow down. He said the growing global economy is going to help the industry in the longer term.
"If you look at the sectors that are outperforming, it's those that tend to be pro-growth," especially technology and consumer-focused companies, he said. Over the last month that growth, and the strong company profits that come with it, has not translated into gains for stocks. Sandven said that could change when companies start reporting their second-quarter results in July.
The Standard & Poor's 500 index slid 6.43 points, or 0.2%, to 2,721.33 on Friday. The Dow Jones industrial average fell 58.67 points, or 0.2%, to 24,753.09. The Nasdaq composite edged up 9.42 points, or 0.1%, to 7,433.85 as consumer-focused companies rose. The Russell 2000 index of smaller-company stocks slipped 1.29 points, or 0.1%, to 1,626.93.
U.S. markets will be closed Monday for the Memorial Day holiday.
U.S. crude dropped 4% to $67.88 a barrel in New York. Brent crude, used to price international oils, fell 3% to $76.44 a barrel in London. Increased oil production and lower prices could reduce profits for energy companies. Exxon Mobil shares fell 1.9% to $78.71, and Chevron slid 3.5% to $122.19.
Among airlines, Delta rose 2.7% to $55.87 and American climbed 3.1% to $44.91. The stocks have skidded over the last few months as the rising price of oil increased their fuel costs and cut into their profits. For 2018, Delta stock is flat and American Airlines is down 14%.
Bond prices kept rising. The yield on the 10-year Treasury note fell to 2.93% from 2.98%.
The falling yields helped household goods makers break out of their recent struggles. Shares of toothpaste maker Colgate-Palmolive rose 2% to $63.75, and cereal maker Kellogg rose 2.7% to $65.23. The stocks, and others that pay large dividends, have lagged behind the rest of the market as investors found technology firms and consumer-focused companies more attractive thanks to signs of strong growth in the U.S. economy.
Gap dived 14.6% to $28.15 after a drop in sales at Gap-brand stores. Gap has been shifting focus away from the namesake brand because it's not connecting with shoppers and has struggled to separate itself from rivals. Its Old Navy and Banana Republic brands fared better.
Discount retailer Ross Stores slid 6.8% to $77.34 after it gave disappointing forecasts for the current quarter and the full year.
Foot Locker soared 20.2% to $54.74 after it posted results that blew past estimates and said sales of premium shoes continue to improve, which has been a major concern for it and other sporting goods companies.
Shoe Carnival leaped 20.7% to $31.80 after its first-quarter results beat expectations. It, too, said athletic-shoe sales improved.
Fiat Chrysler fell 2% to $21.82 after saying it is recalling 4.8 million vehicles in the U.S. because in rare circumstances drivers may not be able to turn off the cruise control. The company warned owners not to use cruise control until the vehicles can be fixed with a software update. Drivers can still stop the cars using the brakes.
Herbalife dived 9.6% to $48.70 after investor Carl Icahn said he was selling a quarter of his stake in the maker of nutritional supplements.
Wholesale gasoline slid 2.3% to $2.18 a gallon. Heating oil fell 2.5% to $2.21 a gallon. Natural gas stayed at $2.94 per 1,000 cubic feet.
Gold slipped 0.1% to $1,303.70 an ounce. Silver fell 0.8% to $16.55 an ounce. Copper fell 0.6% to $3.08 a pound.
The dollar rose to 109.37 yen from 109.28 yen. The euro fell to $1.1669 from $1.1727.
Germany's DAX rose 0.6%. The CAC 40 in France fell 0.1%. Britain's FTSE 100 rose 0.2%. Japan's benchmark Nikkei 225 index rose 0.1%, South Korea's Kospi lost 0.2%, and Hong Kong's Hang Seng shed 0.6%.
2:35 p.m.: This article was updated with closing prices, context and analyst comment.