By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Private sector employers add 213,000 jobs
NEW YORK (MarketWatch) -- The U.S. stocks were under pressure
but inching higher on Wednesday, as crude-oil prices gave up part
of the gains racked up over a four-day trading span, while economic
data on the labor market and non-manufacturing sector proved
lackluster.
A sizable drop in oil prices sent energy stocks sharply lower,
while investors grappled with a slew of mixed earnings, from
companies such as General Motors, Walt Disney and Merck &
Co.
The S&P 500 (SPX) was ticking slightly higher with energy
and health-care sector stocks leading the losses. Five of 10 main
sectors were trading lower.
The Dow Jones Industrial Average (DJI) hovered near its
Tuesday's closing level, with half of its 30 member trading in
negative territory. Dow's biggest gainer was Walt Disney Inc, which
jumped 7% to hit an intraday high, helping to keep the blue-chip
index in the green.
The Nasdaq Composite (RIXF) was higher with biotech stocks
leading the losses. Gilead Sciences dropped nearly 10% after
disappointing earnings. The iShares Nasdaq Biotechnology ETF was
down more than 3%.
After a four-day rally, which sent oil price up more than 20%
oil prices fell sharply Wednesday, with March WTI crude (CLH5)
dropping more than 4%. Losses came after data released late
Tuesday, and again Wednesday morning from the U.S. Energy
Information Administration, showed oil stockpiles are growing.
Need to Know: Careful what you wish for: Oil-price recovery may
well sting
David Kelly, chief global strategist at J.P. Morgan Funds,
attributed Wednesday's pullback to a big run-up over the past few
days.
"The intraday correlation between oil and stock prices is due to
the power of short-term traders and central bank liquidity," Kelly
said.
Speaking about commodities and currencies and their impact on
equities, Kelly stressed that these asset classes tend to overshoot
in both directions.
"Oil is in the basement and the dollar is in the attic. Lower
oil prices are a positive for global economy unless the global
economy is collapsing, which is not the case if you look at recent
PMI numbers," he added.
"In a slightly longer-term view, the fact that stocks fell in
January, has more to do with big gains over the past few years -
stock markets borrowed gains from 2015, which means gains this year
will be in mid-single-digits," he said.
Crude oil: Oil, which has been sliding throughout the day moved
sharply lower, on the heels of closely watched data from the U.S.
Energy Information Administration, which showed that oil stockpiles
for the week of Jan. 30 rose 6.3 million barrels, compared with
forecasts of 2.8 million barrels. The data follows a Tuesday report
from the American Petroleum Institute similarly indicating a rise
in inventories.
In economic news, private employers added 213,000 jobs in
January, according Automatic Data Processing Inc.. While the number
indicates robust hiring, it fell short of expectations. A survey
measuring the health of services sector in the U.S. edged up,
however the hiring gauge slipped.
Economists use the number to get a feel for the official jobs
report due on Friday, though some analysts caution that the ADP's
predictive value of official jobs number isn't stellar.
A market battleground: Expect a "battle of the bulls and bears"
for Wednesday, said Michael O'Rourke, chief market strategist with
JonesTrading. He notes that so far in 2015, the S&P 500 has
been range-bound, with a range of 1,980 to 1,990 as support and
2,050 to 2,060 serving as resistance points.
"With the growing list of negatives, we are continually amazed
at how many opportunities this market is giving investors to
de-risk within 2% of the all-time high," O'Rourke said in a
note.
Stocks in the spotlight: J.M. Smucker Company (SJM) shares
jumped after the company late Tuesday announced it plans to buy Big
Heart Pet Brands for $3.2 billion excluding debt.
General Motors (GM.XX) shares rose 4% after it posted results
and said it would boost its dividend 20% to 36 cents a share.
Clorox Co.(CLX) shares jumped after the company beat earnings
estimates and lifted outlook.
Merck (MRK) was down 2% after it released results.
Finally getting the deal done: Staples Inc.(SPLS) said it will
buy Office Depot Inc.(ODP) in an acquisition valued at $6.3
billion. Office Depot rose 2.6% and Staples was down 5% on that
news.
Walt Disney Co.(DIS) is up 4% after earnings beat forecasts. On
the losing side, Chipotle Mexican Grill Inc.(CMG) is down over 6%
after profit jumped but sales fell short of expectations late
Tuesday. Gilead Sciences Inc.(GILD) is down 9% after it reported
earnings that beat forecasts, but said it expects price discounts
for its hepatitis C drugs to double in 2015.
See more after-hours action in Movers & Shakers
China cuts reserve requirement for banks: The Nikkei 225 index
saw its biggest gain in two weeks on upbeat earnings. Well after
the close for Chinese stocks, which ended the day lower, the
People's Bank of China cut its reserve ratio for banks by 0.5%.
Among the reactions, gold (GCH5) and copper (HGH5) prices moved
higher.
The Stoxx Europe 600 index was largely flat after sizable gains
on Tuesday, led by a 11% surge for Greek stocks. The Athens
Composite Index was down 1.6% as Prime Minister Alexis Tsipras and
Finance Minister Yanis Varoufakis sought a debt deal with greater
leniency on repayments.
Read: European stocks mixed as Greece continues debt push
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