By Ellie Ismailidou and Carla Mozee, MarketWatch
Bank stocks crumble and tech rally loses steam
U.S. stocks retreated into negative territory Tuesday afternoon,
as oil prices tumbled again on a cut to the government's price
forecast.
The S&P 500 was down 8 points, or 0.4%, at 1,845. The Dow
Jones Industrial Average was down 68 points, or 0.4%, at 15,961.
The Nasdaq Composite lost 21 points, or 0.5% to 4,261.
All three main benchmarks opened in negative territory, turned
positive and later released their gains as oil prices skidded
again, after dipping in and out of positive territory in the
morning. The energy sector was the S&P's worst performer, down
3%, followed by telecommunications and financials. Energy giant
Chevron Corp. (CVX) was leading the Dow industrials decliners.
Read:Bank stocks extend slide toward multiyear lows
(http://www.marketwatch.com/story/bank-stocks-extend-slide-toward-multiyear-lows-2016-02-09)
An earlier rally in the tech sector, which helped lift the main
indexes, particularly the tech-heavy Nasdaq, lost steam as the day
wore on. The tech selloff over the past two sessions had battered
the so-called FANG stocks: Facebook, Amazon, Netflix and Google
parent Alphabet.
On Tuesday, the FANGs pushed higher in the morning but released
gains in the afternoon. Facebook(FB) was down 0.1%, Amazon(AMZN)
fell 1.3%, and Alphabet(GOOGL) (GOOGL) lost 0.2%. The lone outlier
was Netflix(NFLX), which gained 3.7%.
Read:Why a few money-making tech stocks won't make up for the
big losers
(http://www.marketwatch.com/story/why-a-few-money-making-tech-stocks-wont-make-up-for-the-big-losers-2016-02-09)
"The fear is palpable," said Kent Engelke, chief economic
strategist at Capitol Securities Management, pointing to the
heightened volatility in the stock market. "You feel smart for
three seconds and then you get humbled again."
Pressure on oil prices and continuing worries about a slowdown
in global economic growth were behind a stock selloff that hit
markets across the world earlier, analysts said. It began in Japan,
where the Nikkei Stock Average closed more than 5% lower, its
biggest decline since 2013, and the 10-year Japanese benchmark
yield fell into negative territory for the first time ever.
Oil prices
(http://www.marketwatch.com/story/oil-rises-as-downbeat-iea-report-fails-to-add-to-pessimism-2016-02-09)
leaned higher earlier in the day, as they shrugged off a downbeat
report from the International Energy Agency
(http://www.marketwatch.com/story/iea-warns-oil-surplus-will-be-worse-than-expected-2016-02-09),
but tumbled again in the afternoon following the report from the
U.S. Energy Information Administration. Brent oil also fell.
Read:Oil industry woes grow as storage levels hit 'critical
level'
(http://www.marketwatch.com/story/oil-industry-woes-grow-as-storage-levels-hit-critical-level-2016-02-08)
Companies in the energy space with balance-sheet issues continue
to get severely punished, said Tim Anderson, managing director at
MND Partners. He cited Chesapeake Energy corp. (CHK), which slid
3.2% Tuesday on top of Monday's 33% plunge, and Williams Companies
Inc. (WMB), which recovered 1.3% Tuesday after a 35% loss
Monday.
If the "quality names" in the oil sector, namely "big
multinationals positioned to survive any shakeout" can outperform
the commodity "today, and maybe throughout the week it could be an
early sign of a change in sentiment toward the sector," Anderson
said.
Read:Will oil be so cheap that it won't pay to pump it out of
the ground?
(http://www.marketwatch.com/story/will-oil-be-so-cheap-that-it-wont-pay-to-pump-it-out-of-the-ground-2016-02-09)
Bank stocks got pounded both in the U.S. (XLF) and in Europe
amid worries about the impact of record-low interest rates and
deteriorating credit conditions on banks' balance sheets. Goldman
Sachs Group Inc. (GS) and J.P. Morgan Chase & Co. (JPM) were
among the Dow industrials leading decliners.
Yellen ahead: Tuesday's moves come ahead of the marquee event
for U.S. markets this week: Fed Chairwoman Yellen's semiannual
testimony before House and Senate committees on Wednesday and
Thursday.
"The market is starting to price out any more rate hikes from
the Fed in 2016, let alone at the March meeting. Anything from
Janet Yellen that confirms or denies that thinking will see markets
react as the feeling that the Fed acted too early in December
continues to grow," said James Hughes, chief market analyst at
GKFX, in a note.
Read:Five questions Janet Yellen must answer
(http://www.marketwatch.com/story/five-questions-janet-yellen-must-answer-2016-02-09)
(http://www.marketwatch.com/story/five-questions-janet-yellen-must-answer-2016-02-09)"This
really could go either way, but building fears of a global slowdown
do seem to have the potential to push back the next round of U.S.
rate hikes. Anything that adds weight to this argument can only
mean more good news for stocks," said Tony Cross, market analyst at
Trustnet Direct, in a note.
Economic data: A report on U.S. job openings, known as JOLTS,
jumped to 5.6 million in December
(http://www.marketwatch.com/story/job-openings-jump-to-56-million-in-december-second-highest-on-record-2016-02-09),
the second-highest on record. Yellen has said she pays close
attention to the quit rate, a proxy of worker confidence, included
in the report.
But inventories at U.S. wholesalers fell in December
(http://www.marketwatch.com/story/wholesale-inventories-fall-for-third-month-in-row-2016-02-09)for
the third straight month, another sign companies cut back on
restocking toward the end of 2015 amid softer sales.
Earnings: Goodyear Tire and Rubber Co. (GT) rallied 5% despite
the company's report of a fourth-quarter loss
(http://www.marketwatch.com/story/goodyear-posts-loss-as-it-books-charges-2016-02-09)
as a write-down of the company's Venezuela operations, currency
fluctuations and a one-time tax benefit the previous year masked
financial results that beat analyst estimates.
Sears Holdings Corp. (SHLD) plunged 6.6% after the company
warned its fourth-quarter revenue would fall short
(http://www.marketwatch.com/story/sears-warns-on-sales-to-speed-up-store-closures-2016-02-09)
of expectations, prompting the retailer to accelerate store
closures and make deeper cost cuts.
Coca-Cola Co. (KO) reported fourth-quarter revenue
(http://www.marketwatch.com/story/coca-cola-revenue-beats-but-profit-falls-short-2016-02-09)
of $10 billion, above expectations of $9.9 billion, but per-share
earnings of 28 cents were below Wall Street's forecast of 37 cents.
Coke was up 0.5%.
Drugstore chain operator CVS Health Corp. (CVS) reversed losses
to trade 1.4% higher after the company posted fourth-quarter sales
and profit that met expectations
(http://www.marketwatch.com/story/cvs-growth-boosted-by-acquisitions-pharma-2016-02-09).
Wendy's Co.'s (WEN) preliminary fourth-quarter adjusted profit
(http://www.marketwatch.com/story/wendys-profit-revenue-beats-expectations-2016-02-09)
of 12 cents a share beat expectations and the company anticipates
same-store sales growth above what analysts were projecting.
Wendy's shares lost 4.3%.
After the bell, Tesla Motors Inc. (TSLA) is forecast to report
adjusted fourth-quarter earnings of 16 cents a share. Read:Tesla
earnings: Model 3 spending, Model X sales in focus
(http://www.marketwatch.com/story/tesla-earnings-model-3-spending-model-x-sales-in-focus-2016-02-05)
Other markets:Bank shares fell
(http://www.marketwatch.com/story/european-stocks-get-clobbered-again-as-banks-slump-2016-02-09)
in Europe amid a broad drop in European stock markets. Investors
seeking safety pushed the yen to its highest level against the U.S.
dollar since November 2014
(http://www.marketwatch.com/story/panicked-investors-flock-to-the-yen-shredding-the-dollar-2016-02-09)
Treasury yields fell sharply in early Asia trade but recovered
by the U.S. day, leaving yields little changed
(http://www.marketwatch.com/story/japans-10-year-bond-yield-turns-negative-2016-02-09).
Gold prices turned down, trading below $1,200 an ounce.
(END) Dow Jones Newswires
February 09, 2016 13:10 ET (18:10 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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