U.S. stocks closed slightly lower Wednesday, with the market giving back some of its gains the day after the Standard & Poor’s 500 index and Nasdaq composite hit record highs.
Energy stocks led the modest slide as crude oil prices fell after a three-day rally. Communications companies also helped pull down the market, offsetting gains in real estate and other sectors. Bond prices rose as traders took a more defensive approach.
Stocks wavered between small gains and losses much of the day as investors waded through corporate earnings reports. Analysts have been expecting a contraction in first-quarter corporate profits, but the results so far have been mostly solid.
That trend continued Wednesday with strong reports from e-commerce company EBay, industrial giant Caterpillar and health insurer Anthem.
“The pace of earnings beats is at a very nice level, certainly exceeding diminished expectations,” said Eric Wiegand, senior portfolio manager for Private Wealth Management at U.S. Bank. “The strength of the dollar has been, perhaps, a little bit of a weight on markets today.”
The S&P 500 index fell 6.43 points, or 0.2%, to 2,927.25. It had closed at a record high Tuesday. The Nasdaq composite, also coming off a record-high close, fell 18.81 points, or 0.2%, to 8,102.01. The Dow Jones industrial average fell 59.34 points, or 0.2%, to 26,597.05.
Small-company stocks fared better than the rest of the market. The Russell 2000 index rose 3.04 points, or 0.2%, to 1,588.13.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.52% from 2.57%.
The stock market mounted a strong recovery this year after finishing 2018 in a steep slump fueled by fears of recession, an escalating U.S.-China trade war and concern that the Federal Reserve was moving too aggressively to raise interest rates.
Those worries have been mostly quelled this year amid greater confidence in the economy and reassurances that the Fed is unlikely to raise interest rates this year.
Traders have also been more confident in the prospects for corporate earnings growth as companies have begun reporting solid first-quarter results.
About one-fourth of S&P 500 companies have issued their first-quarter report cards, with overall earnings growth so far of 2.4%. Still, analysts forecast earnings will be down 3% by the time all S&P 500 companies deliver results. That would be the first decline since spring 2016.
Energy stocks fell more than the 10 other S&P 500 sectors, losing 1.9%. National Oilwell Varco led the way down, shedding 5.1%.
The slide came as the price of U.S. crude oil snapped a three-day winning streak.
Benchmark U.S. crude fell 0.6% to $65.89 a barrel. Oil had been climbing recently since dropping below $43 a barrel in late December. Brent crude rose 0.1% to $74.57 a barrel.
Anadarko Petroleum bucked the energy sector’s broad slide as the oil and gas exploration and production company became the focus of a bidding war by two of the oil industry’s largest companies.
Occidental Petroleum is hoping to beat a rival bid that Chevron made this month. The two companies are hoping to secure their position in the oil-rich Permian Basin. Anadarko vaulted 11.6%. Occidental slipped 0.6%, and Chevron fell 3.1%.
The latest company earnings reports included some disappointing results, which weighed on stocks.
AT&T dropped 4.1% after the telecommunications giant’s first-quarter revenue fell short of forecasts, partly because of a big decline in premium video subscribers.
IRobot plunged 23.1% after its revenue fell short of Wall Street forecasts. The company, best known for its robotic Roomba vacuum, beat profit forecasts for the quarter and gave investors solid guidance for the year, but it wasn’t enough to overcome disappointing revenue growth.
Other companies got a boost from their quarterly snapshots.
EBay rose 5% after it raised its full-year sales and profit forecast. Its number of active buyers rose 4% during the first quarter, pushing revenue and profit beyond Wall Street forecasts.
Flir Systems climbed 5.5% after the imaging and surveillance systems company turned in better-than-expected first-quarter results and a solid forecast.
SAP soared to an all-time high after activist investor Elliott Management revealed a $1.3-billion investment in the German software company on the same day SAP reported solid first-quarter results. SAP’s U.S.-listed stock jumped 12.4%.
Wholesale gasoline inched down 0.1% to $2.13 a gallon. Heating oil fell 0.9% to $2.10 a gallon. Natural gas rose 0.3% to $2.46 per 1,000 cubic feet.
Gold rose 0.5% to $1,279.40 an ounce. Silver rose 0.8% to $14.92 an ounce. Copper rose 0.6% to $2.91 a pound.
The dollar rose to 112.35 yen from 111.83 yen. The euro weakened to $1.1143 from $1.1215.