Stocks Dip, Oil Prices Fall 05/25 15:48
Energy companies and oil prices took their worst losses in months Friday on
reports OPEC countries plan to produce more oil soon.
NEW YORK (AP) -- Energy companies and oil prices took their worst losses in
months Friday on reports OPEC countries plan to produce more oil soon. Stock
indexes finished an indecisive week with small losses.
U.S. crude oil sank 4 percent after multiple reports indicated that Russia
and OPEC could start producing more oil soon. They cut production at the start
of 2017 following a big buildup in supplies that had pushed prices lower.
In November they extended that cut through the end of 2018, but according to
reports this week, they might agree to start raising production in June. U.S.
crude finished at a three-year high Monday and has fallen 6 percent since then.
The drop in the price of oil has meant sharp losses for energy companies,
but it gave airlines a boost as investors anticipated lower fuel costs. Bond
yields declined again, which hurt banks but helped dividend-payers like
household goods makers.
Wall Street also focused on quarterly results from retailers. Gap plunged
after it said its namesake brand is still struggling, but Foot Locker soared
after it said sales of premium shoes improved.
Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said
energy companies and oil prices had made big gains lately and were due to slow
down. He said the growing global economy is going to help the industry in the
"If you look at the sectors that are outperforming, it's those that tend to
be pro-growth," he said, especially technology and consumer-focused companies.
Over the last month that growth, and the strong company profits that come with
it, have not translated into gains for stocks. Sandven said that could change
when companies start reporting their second-quarter results in July.
The S&P 500 index slid 6.43 points, or 0.2 percent, to 2,721.33. The Dow
Jones industrial average fell 58.67 points, or 0.2 percent, to 24,753.09. The
Nasdaq composite climbed 9.42 points, or 0.1 percent, to 7,433.85 as
consumer-focused companies moved higher. The Russell 2000 index of
smaller-company stocks lost 1.29 points, or 0.1 percent, to 1,626.93.
U.S. markets will be closed Monday for the Memorial Day holiday.
U.S. crude dropped to $67.88 a barrel in New York. Brent crude, used to
price international oils, fell 3 percent to $76.44 a barrel in London.
Increased oil production and lower prices could reduce profits for energy
companies. Exxon Mobil fell 1.9 percent to $78.71 and Chevron gave up 3.5
percent to $122.19.
Among airlines, Delta gained 2.7 percent to $55.87 and American rose 3.1
percent to $44.91. The stocks have skidded over the last few months as the
rising price of oil increased their fuel costs and cut into their profits.
Delta stock is flat in 2018 and American Airlines has fallen 14 percent.
Bond prices kept rising. The yield on the 10-year Treasury note fell to 2.93
percent form 2.98 percent.
The falling yields helped household goods makers break out of their recent
struggles. Toothpaste maker Colgate-Palmolive added 2 percent to $63.75 and
cereal maker Kellogg rose 2.7 percent to $65.23. The stocks, and others that
pay large dividends, have lagged behind the rest of the market as investors
found technology firms and consumer-focused companies more attractive thanks to
signs of strong growth in the U.S. economy.
Gap dropped 14.6 percent to $28.15 following a drop in sales for Gap brand
stores. Gap has been shifting focus away from the namesake brand because it's
not connecting with shoppers and has struggled to separate itself from rivals.
Its Old Navy and Banana Republic brands fared better. Elsewhere, discount
retailer Ross Stores gave up 6.8 percent to $77.34 after it gave disappointing
forecasts for the current quarter and the full year.
Foot Locker blew past estimates and said sales of premium shoes continue to
improve, which has been a major concern for it and other sporting goods
companies. The stock jumped 20.2 percent to $54.74. Shoe Carnival leaped 20.7
percent to $31.80 after it beat expectation in the first quarter. It, too, said
athletic shoe sales improved.
Fiat Chrysler fell 2 percent to $21.82 after saying it's recalling 4.8
million vehicles in the U.S. because in rare circumstances drivers may not be
able to turn off the cruise control. The company warned owners not to use
cruise control until the vehicles can be fixed with a software update. Drivers
can still stop the cars using the brakes.
Wholesale gasoline slid 2.3 percent to $2.18 a gallon. Heating oil lost 2.5
percent to $2.21 a gallon. Natural gas remained at $2.94 per 1,000 cubic feet.
Gold slipped 0.1 percent to $1,303.70 an ounce. Silver lost 0.8 percent to
$16.55 an ounce. Copper fell 0.6 percent to $3.08 a pound.
The dollar rose to 109.37 yen from 109.28 yen. The euro fell to $1.1669 from
Germany's DAX rose 0.6 percent and the CAC 40 in France fell 0.1 percent.
Britain's FTSE 100 rose 0.2 percent. Japan's benchmark Nikkei 225 index rose
0.1 percent and South Korea's Kospi lost 0.2 percent. Hong Kong's Hang Seng
shed 0.6 percent.