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Wednesday, October 21, 2020
Banking U.S. stock indexes notch modest losses; oil prices surge

U.S. stock indexes notch modest losses; oil prices surge

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A slide in technology and consumer-focused companies helped pull U.S. stock indexes modestly lower Thursday, offsetting strong energy sector gains.

A broad swath of retailers, from department stores to fast-food chains, also notched losses, while most of the big gainers were oil production and drilling companies.

They got a boost from a report indicating fuel stockpiles fell precipitously last week. The price of U.S. crude also jumped on the report, and closed nearly 5 percent higher.

U.S. bond yields also surged, as traders reacted to the European Central Bank’s decision to leave its key interest rates unchanged and hold off on extending a stimulus program.

Still, in the absence of any major new economic data, the stock indexes continued a recent pattern of mostly sluggish trading.

“It’s been many, many days since we’ve had a substantive move either to the upside or the downside in the market,” said Erik Davidson, chief investment officer for Wells Fargo Private Bank. “It still feels like a holiday week.”

The Dow Jones industrial average lost 46.23 points, or 0.3 percent, to 18,479.91. The Standard & Poor’s 500 index slid 4.86 points, or 0.2 percent, to 2,181.30.

The sell-off in technology stocks weighed on the Nasdaq composite index, which fell 24.44 points, or 0.5 percent, to 5,259.48. The tech-heavy index set all-time highs on Tuesday and Wednesday.

Apple slid 2.6 percent a day after the consumer electronics giant introduced its newest slate of products, including a new iPhone that doesn’t come with an analog headphone jack. The stock shed $2.84 to $105.52.

Investors also got a dash of tech sector deal news. Hewlett Packard Enterprise agreed to spin off part of its business software unit to Micro Focus in a deal valued at $8.8 billion. The pact calls for HP Enterprise to remain majority owner of the new company. Shares in HP Enterprise slid 71 cents, or 3.2 percent, to $21.38.

Separately, Intel said it will spin its cybersecurity business into a new company called McAfee for $3.1 billion in cash. Private equity firm TPG will invest $1.1 billion in the new company and own a majority stake. Intel slipped 2 cents to $36.44.

All told, technology stocks were the biggest decliner in the S&P 500, shedding 0.9 percent. The sector is up 9.1 percent this year.

“The tech sector has been strong and outside of today continues to be strong,” said Willie Delwiche, an investment strategist at Baird.

Investors hammered retailers Tractor Supply and Pier 1 Imports.

Tractor Supply slumped 16.9 percent after the farming and hardware goods retailer said its business is being hurt by poor economic conditions in rural, energy-producing areas where it does most of its business, and other factors. The stock was the biggest decliner in the S&P 500 index, shedding $14.15 to $69.38.

Pier 1 Imports tumbled 15 percent after the home decor retailer gave weak quarterly guidance and said its president and CEO will leave the company at the end of the year. The stock slid 72 cents to $4.08.

Several oil drilling and production companies rose on the latest oil stockpiles figures, pushing the S&P 500’s energy sector 1.7 percent higher. The sector is up 17.4 percent this year.

Chesapeake Energy rose 93 cents, or 13.7 percent, to $7.74, the biggest gainer in the S&P 500 index. Diamond Offshore Drilling gained $1.43, or 9 percent, to $17.40. Murphy Oil climbed $1.90, or 6.8 percent, to $29.75.

Traders also bid up crude oil prices. Benchmark U.S. crude rose $2.12, or 4.7 percent, to close at $47.62 a barrel in New York. Brent crude, used to price international oils, gained $2.01, or 4.2 percent, to $49.99 in London.

The news out of the European Central Bank helped ease demand for U.S. bonds, driving their prices lower and pushing yields higher. The yield on the 10-year Treasury rose to 1.60 percent from 1.54 percent late Wednesday.

“They’re not adding more stimulus, and that maybe makes people feel less like they need to pile into U.S. bonds,” said Delwiche.

At a news conference, ECB President Mario Draghi seemed relatively confident about the economy and less inclined to hint at more stimulus than some analysts had expected. He urged governments to do their part.

Despite Draghi’s more confident tone, the ECB will have to take more stimulus action at its October or December meetings, analysts said.

News of the ECB’s decisions weighed on most of Europe’s major stock indexes. Germany’s DAX fell 0.7 percent, while France’s CAC-40 declined 0.3 percent. The FTSE 100 index of leading British shares rose 0.2 percent.

Earlier, some markets in Asia closed higher following a report showing that imports rose in China last month for the first time since late 2014, while a contraction in exports narrowed. The Hang Seng index in Hong Kong gained 0.8 percent. Seoul’s Kospi added 0.1 percent, while India’s Sensex rose 0.3 percent to 29,006.18. Japan’s Nikkei 225 index fell 0.3 percent.

In other energy trading, wholesale gasoline rose 7 cents, or 5.2 percent, to $1.42 a gallon. Heating oil added 6 cents, or 3.9 percent, to $1.48 a gallon. Natural gas rose 13 cents, or 4.9 percent, to $2.81 per 1,000 cubic feet.

Among metals, gold slid $7.60 to $1,341.60 an ounce, while silver fell 17 cents to $19.68 an ounce. Copper held steady at $2.10 a pound.

In currency markets, the dollar strengthened to 102.49 yen from 101.75 on Wednesday. The euro climbed to $1.1257 from $1.1245.

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