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Stocks end mixed after oil prices skid and safety stocks fall

Wall Street
Outside the New York Stock Exchange.
(Mark Lennihan / Associated Press)

U .S. stocks swerved between gains and losses Thursday and wound up with a muddled finish as the price of oil plunged. Investors also sold utility and phone company stocks. They have favored those companies all year, especially in the wake of Britain’s vote last month to leave the European Union.

Stocks started higher, building on gains from the previous day. But they fell after a government report that showed oil stockpiles did not shrink as much as investors had hoped. Investors sold government bonds after buying them at a rapid clip earlier this week, and precious metals prices also slid. Energy companies were hammered as the price of oil dropped almost 5%.

Nate Thooft, head of global asset allocation for Manulife Asset Management, noted that stocks and oil prices have often traded in tandem this year.

“Where oil goes, stocks go,” he said. “Oil fell dramatically pretty quickly.”

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The Dow Jones industrial average fell 22.74 points, or 0.1%, to 17,895.88. The Standard & Poor’s 500 index slipped 1.83 points, or 0.1%, to 2,097.90. The Nasdaq composite rose 17.65 points, or 0.4%, to 4,876.81. The Dow had been up much as 66 points in the morning and down as much as 102 points in the afternoon.

Oil prices fell after the Energy Information Administration said crude oil inventories shrank by 2.2 million barrels last week. Analysts had expected a bigger drop of 2.6 million barrels, according to S&P Global Platts. Inventories have been at historically high levels lately as the supply of oil outstrips demand.

Investors sold some of the safest groups of stocks.

Duke Energy sank 2.2% to $85.29. Xcel Energy dropped 2.2% to $44.32. AT&T fell 1.9% to $42.30. The Standard & Poor’s 500’s utility and phone company indexes have both climbed 20% this year.

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Bond prices slipped. The yield on the 10-year U.S. Treasury note rose to 1.39% from 1.37%. The yield on the 30-year Treasury note remained around 2.14%. Both notes have set all-time lows in recent days.

Gold, which is trading near its highest price in more than two years, fell $5 to $1,362.10 an ounce. Silver fell 37 cents, or 1.8%, to $19.84 an ounce. Copper declined 3 cents to $2.12 a pound.

Benchmark U.S. crude dropped $2.29, or 4.8%, to $45.14 a barrel in New York. Brent crude, used to price international oils, declined $2.40, or 4.9%, to $46.40 a barrel in London. In the morning, oil prices rose almost 2%.

Exxon Mobil fell 1.2% to $92.96, and Chevron retreated 1.5% to $103.05.

Organic food maker WhiteWave Foods jumped after French yogurt giant Danone agreed to buy the company for $56.25 a share, or about $10 billion. The deal would expand Danone’s range of health foods and its place in the U.S. market. WhiteWave jumped 18.6% to $56.23.

Dutch antivirus software company AVG Technologies surged after Czech rival Avast Software agreed to buy it for $25 a share, or $1.3 billion. AVG stock soared 30.8% to $24.58.

Health insurers Aetna and Humana slumped as investors worried that the government would stop the companies from combining. Aetna, the third-largest U.S. health insurer, agreed to buy Humana last year for about $35 billion in cash and stock. But the companies can’t complete the deal without approval from the Department of Justice.

Humana stock dropped 9.6% to $162.74 and Aetna skidded 4% to $115.47.

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Investors are looking at reports showing healthy hiring. A survey by payroll processor ADP said private U.S. companies added 172,000 jobs in June, a sign hiring may have picked up again after it slowed in April and May. Meanwhile the U.S. government said weekly applications for unemployment benefits fell last week, another sign employers continue to hire more workers. The government will release its own jobs report Friday.

“There’s a general consensus that there’s going to be a bounce-back for June,” Thooft said. He said stocks could trade lower if the results are disappointing but that if the report is solid or better than expected, investors might wonder if that will encourage the Federal Reserve to raise interest rates.

Costco stock climbed 4.9% to $163.70 after investors were pleased with the warehouse club operator’s June sales.

Irvine-based hard drive maker Western Digital forecast stronger results for its fiscal fourth quarter after it acquired flash memory chip maker SanDisk in May. Western Digital stock rose 4.8% to $47.66.

In other energy trading, wholesale gasoline fell 7 cents, or 4.9%, to $1.36 a gallon. Heating oil fell 6 cents, or 4.1%, to $1.41 a gallon. Natural gas slipped 1 cent to $2.78 per 1,000 cubic feet.

Britain’s FTSE 100 rose 1.1%, France’s CAC 40 advanced 0.8% and Germany’s DAX increased 0.5%. Japan’s benchmark Nikkei 225 index slid 0.7%. South Korea’s Kospi climbed 1.1% and Hong Kong’s Hang Seng rose 1%.

The dollar declined to 100.76 yen from 101.40 yen. The euro fell to $1.1055 from $1.1105. The British pound declined to $1.2896 from $1.2922. It’s been trading at 30-year lows in the last few days. 


UPDATES:

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2:29 p.m.: This article was updated with closing prices and additional information. 

10:31 a.m.: This article was updated with more recent stock prices and additional information. 

This article was originally published at 7:59 a.m.


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