Drop in Commodities Damps U.S. Stocks
May 04 2017 - 11:34AM
Dow Jones News
By Akane Otani and Riva Gold
U.S. stock indexes wavered Thursday, pressured by a steep drop
in commodity prices.
The Dow Jones Industrial Average fell 29 points, or 0.14%, to
20951. The S&P 500 was flat, and the Nasdaq Composite down
0.06%.
Major stock indexes have climbed the past few weeks as quarterly
earnings results have pointed to health among U.S. corporations.
The U.S. posted the biggest improvement in its revision ratio --
which measures the ratio of upward and downward earnings estimates
by analysts -- of all regions in April, according to Bank of
America Merrill Lynch.
Solid earnings could help stocks keep advancing, investors and
analysts say, even as some have expressed concerns about recent
weakness in inflation, consumer spending and economic growth.
"The earnings story is still very robust, and that's why
investors have been able to look through some of the softer
economic data," said Jason Draho, head of tactical asset allocation
Americas at UBS Wealth Management.
Commodity prices slid across the board on Thursday, putting
pressure on shares of energy companies. U.S. crude oil fell 2.6% to
$46.57 a barrel, deepening its losses for the year. Energy shares
in the S&P 500 fell 1.6%, with Dow component Chevron falling
1.5%.
Financial shares in the S&P 500 rose with yields, giving
major indexes a boost. American International Group, which reported
Wednesday afternoon that it swung to a profit in the latest
quarter, jumped 2.7%, while Wells Fargo added 1.3%.
Government bonds slipped Thursday, with the yield on the 10-year
U.S. Treasury note rising to 2.365%, according to Tradeweb, from
2.309% on Wednesday. Yields rise as bond prices fall.
Elsewhere, the Stoxx Europe 600 rose 0.4% after a measure of
activity in the eurozone's manufacturing and services sectors rose
to a six-year high and retail-sales figures improved.
"For the first time since the European sovereign-debt crisis
broke out, we have a synchronized economic upswing in almost all
continental European economies," said Frank Engels, head of
multiasset portfolios at Union Investment.
Earlier, a global decline in metals prices gained speed in Asian
trading Thursday amid concerns about Chinese demand for commodities
such as steel and iron. China's iron-ore futures opened at the 8%
limit drop, while copper futures fell 1.9% and gold slid 1.3%.
A measure of service-sector activity in China hit its lowest
level in nearly a year for April on Thursday, adding to concerns
about the country's economic health, though it remained in
expansion territory.
"China has been gradually but appreciably tightening credit,"
said Tina Byles Williams, chief investment officer and chief
executive at FIS Group, noting that is slowly showing up in
economic data and metal prices.
"I don't see catastrophe, but I do think there's a lot of
complacency in emerging-market assets around China," she said.
The Shanghai Composite Index fell 0.3%, ending lower for a third
straight session. South Korean equities powered to record highs,
adding 1% Thursday as index heavyweight Samsung advanced. Japan's
markets were closed for a holiday.
Write to Akane Otani at akane.otani@wsj.com and Riva Gold at
riva.gold@wsj.com
(END) Dow Jones Newswires
May 04, 2017 11:19 ET (15:19 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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