US Stocks Are Slightly Lower; Oil Tops $46
New York (Oct 29) Stocks were slightly lower by mid-afternoon Thursday with the energy sector struggling to stay positive as crude oil topped $46 a barrel.
The S&P 500 was down 0.17%, the Dow Jones Industrial Average fell 0.2%, and the Nasdaq slid 0.35%.
The energy sector was the only one in the green, though barely, as crude oil built upon Wednesday's rally. Crude had closed out its best one-day rally in more than two months on Wednesday after a better-than-expected read on weekly inventories. West Texas Intermediate crude was up 0.3% to $46.08 a barrel on Thursday.
Among the best performers in the energy sector, BP (BP) , Petrobras (PBR.A) , and Phillips 66 (PSX) rose, while the Energy Select Sector SPDR ETF (XLE) added 0.5%.
The U.S. economy slowed significantly in the third quarter, according to the Department of Commerce. The first estimate of quarterly GDP rose 1.5% after a 3.9% reading in the second quarter. The slowdown was attributed to a negative swing in inventory investment, though demand in the domestic economy remained robust.
"While a below-trend quarter for growth implies the accumulation of some economic slack, the Federal Reserve will be comforted by the momentum in the domestic economy," David Tulk, head of global macro strategy at TD Securities, wrote in a note. "While this print is inherently backwards looking, it is not inconsistent with a December hike."
Pending home sales in the U.S. fell in September for the second straight month, the National Association of Realtors said Thursday. The index fell 2.3% to its second-lowest level of the year, though remained up 3% from a year earlier. Weather could have played a role in weakness after heavy rainfall in the Northeast over the month. Economists expected the measure to increase 1%.
Deutsche Bank (DB - Get Report) weighed on the financials sector after declining 8.6% after detailing plans to exit 10 countries and reduce its workforce by around 35,000 jobs. Management also told shareholders it would not offer a dividend this year or next as it focus on restructuring efforts. The bank said it intends to offer a common share dividends beginning fiscal year 2017.
Other banking stocks such as Wells Fargo (WFC - Get Report) , JPMorgan (JPM - Get Report) , Bank of America (BAC - Get Report) , Citigroup (C - Get Report) , and Westpac (WBK) moved lower, while the Financial Select Sector SPDR ETF (XLF) fell 0.3%.
Both Allergan (AGN) and Pfizer (PFE) confirmed they are in talks regarding a potential merger. However, disagreements over price could delay proceedings. Allergan shares jumped more than 7%, while Pfizer slid 2%.
MGM Resorts (MGM) spiked 5.3% after detailing plans to create a real estate investment trust containing ten of its casinos. The REIT transaction is expected to be completed in the first quarter of 2016. Separately, the casino operator reported better-than-expected earnings and sales in its third quarter.
French drugmaker Sanofi (SNY) warned that diabetes revenue will likely decline over the next three years as its line of treatments face increasing competition in the U.S. Division sales are expected to fall every year by 4% to 8%. Shares fell 3.6% on the news.
MasterCard (MA) shares rose 1.1% after the credit card company reported a better-than-expected quarter. Sales climbed 8% on a constant-currency basis boosted by a 12% increase in worldwide purchase volume.
Time Warner Cable (TWC) reported a mixed quarter. The cable company earned $1.62 a share, a nickel above estimates, while revenue of $5.92 billion missed forecasts by $40 million. Overall sales climbed nearly 4% from a year earlier.
PayPal (PYPL) fell 4.3% after reporting its first quarter as a standalone company in more than a decade. The online-payments company earned 31 cents a share, 2 cents above estimates, while revenue of $2.26 billion fell short of forecasts. PayPal added 4 million active customer accounts over the quarter.
Yelp (YELP) jumped 6% after quarterly sales surged 40% to $143.6 million, led by a 35% increase in online reviews, while GoPro (GPRO) slumped 14% after missing analysts' expectations on its top- and bottom-line.
Amgen (AMGN) added more than 1% on strong quarterly sales tied to its arthritis drug, Enbrel. The biotech company also increased its full-year earnings guidance to between $9.95 and $10.10 a share from previous guidance no higher than $9.80 a share.
Markets moved unpredictably on Wednesday, plummeting before rallying more than 1%, after the Fed held rates steady but left a potential December rate hike in play. Investors had hoped the Fed would provide further clarification on how likely a rate hike this year might be.
Jobless claims rose less than expected in the week ended Oct. 24. The number of new claims for unemployment benefits in the U.S. increased by 1,000 to 260,000, compared to an expected increase to 263,000. Continuing claims fell by 40,000 to 2.14 million.