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Post-election stock surge fades, and oil prices sink again

Post-election stock surge fades, and oil prices sink again
The opening bell hangs above the trading floor at the New York Stock Exchange. (Mark Lennihan / Associated Press)

U.S. stocks slipped Thursday as oil prices’ ninth consecutive drop hurt energy companies. U.S. markets were coming off huge gains from the day before.

U.S. crude oil has slumped more than 20% since early October, meeting Wall Street's definition of a bear market.

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Government fuel stockpiles have steadily expanded, pushing supplies higher, and the United States issued waivers to a number of countries that buy oil from Iran. Those waivers allow the countries to keep importing Iranian oil despite renewed sanctions on Iran.

Most other groups of stocks finished little changed. Banks made the largest gains. The Federal Reserve left interest rates where they are, but suggested it plans to keep raising rates in response to the strong U.S. economy.

After its dive in October, the Standard & Poor’s 500 index had risen six of the seven days through Wednesday. Stocks started sinking last month because investors worried that the Fed would raise interest rates to the point they slowed economic growth. But John Lynch, chief investment strategist at LPL Research, said he thinks the Fed will stop raising rates in 2019.

“We do not believe they will be as aggressive as many fear,” he said. “We still don't have anything approaching the wage pressures that have historically scared the Fed.”

The S&P 500 fell 7.06 points, or 0.3%, to 2,806.83 on Thursday after it jumped 2.1% on Wednesday. The Dow Jones industrial average inched up 10.92 points to 26,191.22.

The Nasdaq composite fell 39.87 points, or 0.5%, to 7,530.88; the day before, it surged 2.6%. The Russell 200 index of smaller-company stocks slipped 3.95 points, or 0.2%, to 1,578.21.

Benchmark U.S. crude oil fell 1.6% to $60.67 a barrel in New York. On Oct. 3 it closed at $76.41, its highest level in almost four years. Brent crude slid 2% to $70.65 a barrel in London. Brent crude is the standard for international oil prices, and it has also fallen sharply over the last five weeks.

Exxon Mobil shares fell 1.6% to $81.71, and ConocoPhillips shares slid 4.5% to $66.91.

Bond prices edged down. The yield on the 10-year Treasury note rose to 3.24%, near its highest level this year, from 3.23%. The Federal Reserve left interest rates unchanged, but suggested it plans to keep raising them in response to the strong U.S. economy. The Fed has raised its key rate eight times since late 2015 and is expected to do so again in December, with several more increases to follow.

Bank of America shares rose 1.2% to $28.87. M&T Bank rose 1.2% to $167.37.

The Fed has been raising rates to prevent inflation from getting out of hand. LPL’s Lynch predicts inflation won’t get much stronger because wages won’t grow much faster than they currently are growing. He said factors such as the retirement of more baby boomers, global competition and slower economic growth in the United States will limit increases in pay.

Qualcomm sank 8.2% to $58.05. The chipmaker had a strong quarter, but for the current period it's projecting revenue of $4.5 billion to $5.3 billion — far below the $5.6 billion analysts expected, according to FactSet.

Apple stopped making royalty payments to Qualcomm after a dispute between the companies, and it later decided to stop using Qualcomm modems in some of its products. Qualcomm said those changes have hurt its results.

D.R. Horton, one of the largest home builders, fell 9% to $34.22 after it reported earnings and sales that fell short of Wall Street forecasts. It said rising home prices and mortgage rates are affecting demand. That combination has been weighing on home sales and the stocks all year. PulteGroup fell 3.5% to $24.23, Lennar fell 2.5% to $41.90, and KB Home fell 3.5% to $20.62.

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Roku plunged 22.3% to $45.74 even though the video streaming company’s quarterly sales and earnings were better than analysts expected.

Square sank 9% to $75.23 after the payments company issued disappointing guidance for the current quarter.

Wynn Resorts dropped 13.1% to $99.02 after the casino operator said its business in Macau has slowed recently.

Wholesale gasoline was little changed at $1.64 a gallon. Heating oil dropped 3.1% to $2.17 a gallon. Natural gas edged down to $3.54 per 1,000 cubic feet.

Gold fell 0.3% to $1,225.10 an ounce. Silver fell 1% to $14.42 an ounce. Copper fell 0.7% to $2.74 a pound.

The dollar rose to 113.96 yen from 113.34 yen. The euro fell to $1.1363 from $1.1455.

2:50 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 7:30 a.m.

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