Oil giants lead slum in energy stocks
Stocks have closed modestly in the US as oil titans Exxon Mobil and Chevron led a slump in energy stocks.
The Dow Jones industrial average lost 56.12 points, or 0.3%, to 17,689.86. The Standard & Poor's 500 index lost 4.71 points, or 0.2%, to 2,103.92. The Nasdaq composite closed little changed, down half a point to 5,128.28.
It was a see-saw week for the market, but all three major indexes closed higher by roughly 1%.
Shares of Exxon Mobil and Chevron, the two largest publicly traded energy companies, fell roughly 5% each today. Both companies posted major declines in their year-over-year profits largely due to the big drop in the price of oil.
In the case of Exxon, earnings fell 52% from a year earlier, causing the company to report its lowest quarterly profit since June 2009. Exxon shares fell 3.80 dollars, or 4.6%, to 79.21 dollars.
Chevron, hurt by low oil prices and a write-off of some of its assets, reported its lowest profit in 13 years. The company reported a profit of 30 cents a share, well below the 1.13 dollars analysts expected. Chevron fell 4.55 dollars, or 4.9%, to 88.48 dollars.
Exxon and Chevron dragged down other energy stocks. The S&P 500 energy sector slumped 2.6%, its biggest drop since January.
Energy companies have been a major drag on corporate earnings in the second quarter. S&P 500 companies are on track for a 1.3% year-over-year decline in earnings, according to FactSet. If energy were excluded, corporate profits would be up 5.4%.
Even with oil prices down more than 50% from a year ago, crude has continued to fall. Oil prices declined sharply again today on continuing concerns over high global supplies and weak demand, helping push oil down 21% for the month.
Benchmark US crude fell 1.40 dollars to close at 47.12 dollars a barrel in New York. Crude fell 12.35 dollars a barrel during the month, from 59.47 dollars at the end of June. Brent crude, a benchmark for international oils used by many US refineries, fell 1.10 dollars to close at 52.21 dollars in London.
A disappointing economic report also weighed on stocks.
US wages and benefits grew at their slowest pace in 33 years in the spring, the Labour Department said, stark evidence that the improving job market is having little impact on paycheques for most Americans. The slowdown likely reflects a sharp drop-off in bonus and incentive pay for some workers.
The lacklustre wage growth suggests that companies are still able to find the workers they need without boosting pay, a sign the job market is not yet back to full health. That could cause the Federal Reserve hold of any increase in interest rates.
Bond prices rose after the report, pushing the 10-year US. Treasury note down to 2.19%t from 2.26% on Thursday.
"I can't imagine the Fed is looking at (this data) this morning as a reason to increase rates in September," said Tom di Galoma, head of rates trading at ED&F Man Capital.
In other energy markets, wholesale gasoline rose 1.3 cents to close at 1.841 dollars a gallon. Heating oil fell 1.4 cents to close at 1.584 dollars a gallon. Natural gas fell 5.2 cents to close at 2.716 dollars per 1,000 cubic feet.
In currencies, the dollar fell 0.3% to 123.90 yen and the euro rose 0.4% to 1.0985 dollars.
In metals trading, gold rose 6.50 dollars to 1,095.90 dollars an ounce and silver rose 5 cents to 14.75 dollars an ounce. Copper fell 1 cent to 2.43 dollars per pound.