Rollercoaster day on Wall Street as price of oil triggers shockwaves
US stocks swerved between gains and losses on Thursday and wound up with a muddled finish as the price of oil plunged.
Investors also sold utility and phone company stocks. They have favoured those companies all year, especially in the wake of Britain's vote to leave the European Union last month.
Stocks started higher, building on gains from the previous day. But they fell after a government report that showed oil stockpiles did not shrink as much as investors had hoped.
Investors sold government bonds after buying them at a rapid clip earlier this week, and precious metals prices also slid. Energy companies were hammered as the price of oil dropped almost 5%.
Nate Thooft, head of global asset allocation for Manulife Asset Management, noted that stocks and oil prices have often traded in tandem this year.
"Where oil goes, stocks go," he said. "Oil fell dramatically pretty quickly."
The Dow Jones industrial average fell 22.74 points, or 0.1%, to 17,895.88. The Standard & Poor's 500 index slid 1.83 points, or 0.1%, at 2,097.90. The Nasdaq composite rose 17.65 points, or 0.4%, to 4,876.81. The Dow rose as much as 66 points in the morning and fell as much as 102 points in the afternoon.
The price of oil fell after the Energy Information Administration said crude oil inventories shrank by 2.2 million barrels last week. Analysts expected a bigger drop of 2.6 million barrels, according to S&P Global Platts. Inventories have been at historically high levels lately as the supply of oil outstrips demand.
Investors sold some of the safest groups of stocks.
Duke Energy shed 1.94 dollars, or 2.2%, to 85.29. Xcel Energy lost 1.01, or 2.2%, to 44.32 dollars. AT&T fell 80 cents, or 1.9%, to 42.30 US dollars. The S&P 500's utility and phone company indexes have both climbed 20% this year. Bond prices dipped. The yield on the 10-year US Treasury note rose to 1.39% from 1.37%. The yield on the 30-year Treasury note remained around 2.14%. Both notes have set all-time lows over recent days.
Gold, which is trading at its highest price in more than two years, lost 5 to 1,362.10 dollars an ounce. Silver lost 37 cents, or 1.8%, to 19.84 dollars an ounce. Copper shed three cents to 2.12 dollars a pound.
Benchmark U.S. crude lost 2.29 US dollars, or 4.8%, to 45.14 US dollars a barrel in New York. Brent crude, used to price international oils, lost 2.40 dollars, or 4.9%, to 46.40 dollars a barrel in London. In the morning oil prices rose almost 2%.
Exxon Mobil fell 1.13 dollars, or 1.2%, to 92.96 dollars and Chevron retreated 1.53 dollars, or 1.5%, to 103.05 dollars.
Organic food maker WhiteWave Foods jumped after French yogurt giant Danone agreed to buy the company for 56.25 dollars a share, or about 10 billion dollars. The deal would expand Danone's range of health foods and the US market. WhiteWave gained 8.80 dollars, or 18.6%, to 56.23 dollars.
Dutch anti-virus software company AVG Technologies surged after rival Avast Software agreed to buy it for 25 dollars a share, or 1.3 billion dollars. AVG stock advanced 5.79 dollars, or 30.8%, to 24.58 dollars.
Health insurers Aetna and Humana slumped as investors worried that the government will stop the companies from combining. Aetna, the third-largest US health insurer, agreed to buy Humana last year for about 35 billion dollars in cash and stock. But the companies cannot complete the deal without approval from the US Department of Justice.
Humana stock dropped 17.24 dollars, or 9.6%, to 162.74 dollars and Aetna skidded 4.77 dollars, or 4%, to 115.47 dollars.
Investors are looking at reports showing healthy hiring. A survey by payroll processor ADP said private US companies added 172,000 jobs in June, a sign hiring may have picked up again after it slowed down in April and May. Meanwhile the US government said weekly applications for unemployment benefits fell last week, another sign employers continue to hire more workers. The government will release its own jobs report on Friday.
"There's a general consensus that there's going to be a bounce-back for June," Mr Thooft said.
He said stocks could trade lower if the results are disappointing, but added that if the report is solid or better than expected, investors might wonder if that will encourage the Federal Reserve to raise interest rates.
Costco stock gained 7.69 dollars, or 4.9%, to 163.70 dollars after investors were pleased with the warehouse club operator's June sales.
Hard drive maker Western Digital forecast stronger results for its fiscal fourth quarter after it acquired flash memory chip maker SanDisk in May. Western Digital stock rose 2.20 dollars, or 4.8%, to 47.66 dollars.
In other energy trading, wholesale petrol lost seven cents, or 4.9%, to 1.36 dollars a gallon. Heating oil fell six cents, or 4.1%, to 1.41 dollars a gallon. Natural gas lost one cent to 2.78 dollars per 1,000 cubic feet.
Britain's FTSE 100 rose 1.1%, France's CAC 40 added 0.8% and Germany's Dax increased 0.5%. Japan's benchmark Nikkei 225 index slipped 0.7%. South Korea's Kospi climbed 1.15% and Hong Kong's Hang Seng rose 1%.
The dollar declined to 100.76 yen from 101.40 yen. The euro fell to 1.1055 from 1.1105 dollars. The British pound declined to 1.2896 dollars from 1.2922. It's been trading at 30-year lows over the last few days.