Stocks are mixed as oil prices fall sharply
NEW YORK — Energy companies and oil prices took their worst losses in months Friday on reports OPEC countries plan to produce more oil soon. Most stock indexes finished an indecisive week with small losses.
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 longer term.
“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.
U.S. markets will be closed Monday for the Memorial Day holiday.
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.
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.