US Stocks Are Mixed as Oil Closes Below $30
New York (Feb 20) Stocks were mixed on Friday afternoon as another slump in crude oil prices pressured the energy sector.
The S&P 500 fell 0.17%, and the Dow Jones Industrial Average was down 0.32%. The Nasdaq added 0.28% on gains in Yahoo! (YHOO - Get Report) and Applied Materials (AMAT - Get Report) .
Crude oil closed below $30 a barrel even as a weekly count on active oil rigs in the U.S. showed another decline. The number of oil rigs in operation fell 26 to 439 last week, the ninth straight week of declines.
Fading hopes of a production cut from the Organization of Petroleum Exporting Countries kept commodities under pressure. On Thursday, reports broke that Saudi Arabia was "not prepared" to limit oil production. OPEC has attempted this week to come to an agreement on a output cap to stabilize oil prices. West Texas Intermediate was down 3.8% to $29.64 a barrel.
"If other producers want to limit or agree to a freeze in terms of additional production, that may have an impact on the market, but Saudi Arabia is not prepared to cut production," Saudi Arabia's Foreign Minister Adel al-Jubeir told AFP.
Saudi Arabia and Russia agreed to a production freeze earlier this week, something which Iran supported but did not commit to.
"While several large producing states have agreed to cap production at current levels -- including Saudi Arabia and Russia -- Iraq and Iran have not made similar commitments and the market has recognized that these token commitments will not be able to stave off bearishness," Schneider Electric's Daniel Holder wrote in a note.
The energy sector was the worst performer Friday. Major oilers Exxon Mobil (XOM) , Chevron (CVX) , Royal Dutch Shell (RDS.A) , Total (TOT) and BP (BP) were lower, while the Energy Select Sector SPDR ETF (XLE) fell 1.2%.
Yahoo! added 2.1% after forming a strategic committee to explore alternatives. Goldman Sachs, JPMorgan and PJT Partners will convene as financial advisers, while the company seeks out other interested partners. The Internet company will likely address what to do with its stake in e-commerce site Alibaba (BABA - Get Report) , as well as its other online properties.
Applied Materials added 7.7% after besting analysts' quarterly estimates on its top- and bottom-lines. The chipmaker earned 26 cents a share, a penny above forecasts, on revenue of $2.26 billion. However, the company did suffer weaker demand in its recent quarter with sales down 5% and new orders dropping 6%.
Fellow tech companies were in the green including Amazon (AMZN) , Alphabet (GOOGL) , Baidu (BIDU) and Salesforce (CRM) .
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The U.S. consumer price index was flat in January as energy prices continued to weigh on the headline number. Excluding food and energy prices, core consumer prices increased 0.3%, its strongest core reading since 2007. Over the past 12 months, core prices have climbed 2.2%.
"While the Fed prefers to focus on an alternative measure of consumer prices called Core Personal Consumption Expenditures (PCE), the historically close correlation between the two, not to mention the strong gains in average hourly earnings in last month's jobs report, suggests that price pressures may finally be starting to rise meaningfully in the U.S.," said Matt Weller, senior market analyst at FOREX.com. "Fed Funds futures traders are only pricing in about a 40% chance of another Fed rate hike at all this year, but if inflation continues to rise, expectations and the dollar itself should rise in sync."
Wall Street was taking a break from the rallies enjoyed at the beginning of the week. Stocks had rocketed higher earlier this week, securing their first three-day winning streak of the year. Investors grew more optimistic over the state of the U.S. economy, hopes for more stable oil prices, and slower hike plans from the Federal Reserve. The S&P 500 dipped out of correction territory, though is now hovering on the cusp of it.
Nordstrom (JWN - Get Report) fell more than 8% after increased promotions over the recent quarter hit margins. The retailer's gross profit rate slid 180 basis points to 34.9%. Nordstrom expects full-year sales growth to range between 3.5% and 5.5%.
Deere (DE - Get Report) fell 3% as the heavy machinery maker continued to see weaker demand from the agricultural sector in its recent quarter. Revenue fell 13% in its first quarter and the company expects equipment sales to fall 10% over the full year.
Apple (AAPL) fell slightly after the company was given more time to respond to a Department of Justice order to assist the FBI in unlocking an iPhone used by the perpetrators of last year's terror attacks in California, sources told CNBC. The tech giant now has until Feb. 26, three days later than the original order. Apple has so far suggested it will not acquiesce with the request.
Source: TheStreet
