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Stock indexes slip; falling oil prices hit energy companies

An American flag flies outside the New York Stock Exchange.
An American flag flies outside the New York Stock Exchange.
(Mary Altaffer / Associated Press)

A late gain for U.S. stocks slipped away Wednesday, ending a four-day winning streak. Energy companies sank along with the price of oil.

The price of crude oil fell more than 3% on Wednesday. Big-dividend payers and industrial companies slipped. Gains by Microsoft, Facebook and Alphabet helped the technology sector finish higher. Banks and healthcare companies also rose.

The United States and China each announced new tariffs: Later this month each country will put a 25% tax on $16 billion worth of goods imported from the other. Both countries placed tariffs on $34 billion in imports earlier this month, and they have threatened much larger tariffs to come.

Investors have been focusing on rising company earnings instead of the trade war. Karyn Cavanaugh, senior markets strategist at Voya Investment Management, said U.S. companies are expecting bigger profits despite the tariffs.

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“That speaks to me a lot louder than a lot of negative headlines,” she said. “Companies have gotten very good at minimizing their costs and being very efficient with what they have.”

The Standard & Poor’s 500 index slipped 0.75 of a point to 2,857.70. The Dow Jones industrial average fell 45.16 points, or 0.2%, to 25,583.75. The Nasdaq composite edged up 4.66 points, or 0.1%, to 7,888.33. The Russell 2000 index of smaller stocks slipped 1.42 points, or 0.1%, to 1,686.88.

The Trump administration plans to tax Chinese industrial products such as steam turbines and iron girders starting Aug. 23. China’s government said it will put tariffs on U.S. goods, including cars, crude oil and scrap metal, starting the same date.

Oil futures fell sharply. U.S. crude oil sank 3.2% to $66.94 a barrel in New York. Brent crude, the standard for international oil prices, slid 3.2% to $72.28 a barrel in London.

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Chevron shares fell 1% to $123.88.

Snap, which runs the Snapchat video app, dropped 6.8% to $12.23 after it said the number of Snapchat daily users fell during the second quarter. It’s the latest technology company to see its stock drop after announcing discouraging user totals, joining Facebook, Twitter and Netflix.

Match Group, the parent of Match.com, OKCupid and other online dating companies, bucked that trend. Its stock soared 17.3% to $45.60 after Match reported big gains in subscribers, especially for Tinder. Its adjusted profit and revenue beat Wall Street projections.

Drugstore and pharmacy benefits manager CVS climbed 4.2% to $68.17 after raising its annual profit forecast. CVS said prescriptions sales grew, although it took a loss after it wrote down the value of its Omnicare pharmacy services business by almost $4 billion.

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In April, construction equipment company Caterpillar said it doubted it would top its first-quarter profit for the rest of this year. Investors worried that might hold true for the rest of corporate America, but so far it hasn’t.

A month ago, analysts expected the companies of the S&P 500 to earn $160.32 per share in 2018. That has risen by almost a dollar, to $161.29 a share. Their estimates for 2019 have risen a bit more than a dollar, to $177.52 a share from $176.38.

Twinkie maker Hostess Brands plunged 17.6% to $11.49 after it said its results were hurt by cuts in promotional support and inventory from a major retailer and by higher costs, including for transportation.

Pizza maker Papa John’s fell 5.2% to $38.94 after it said North American sales fell again and cut its forecasts for the year. Papa John’s is in a public spat with its founder, John Schnatter, who was ousted as chairman in July after a report that he used a racial slur in a conference call. Domino’s, a rival pizza delivery company, climbed 3.4% to $286.92.

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Walt Disney fell 2.2% to $113.98 after the entertainment company’s profit and revenue fell short of analyst estimates.

Cars.com and Avis Budget Group both sank after cutting their sales forecasts. Rental car company Avis skidded 15.2% to $32.85. Cars.com, an online auto marketplace, fell 2.6% to $27.29.

Struggling rival Hertz fell 7.3% to $18.11, giving back some of the 24% gain it posted Tuesday after a better-than-expected quarterly report.

Bond prices turned higher. The yield on the 10-year Treasury note fell to 2.96% from 2.97%.

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Wholesale gasoline fell 4% to $2.02 gallon. Heating oil fell 2.5% to $2.12 a gallon. Natural gas rose 1.8% to $2.95 per 1,000 cubic feet.

Gold rose 0.2% to $1,221 an ounce. Silver rose 0.4% to $15.43 an ounce. Copper remained at $2.75 a pound.

The dollar fell to 110.96 yen from 111.43 yen. The euro rose to $1.1619 from $1.1594.


UPDATES:

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2:15 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 7:35 a.m.


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