Oil prices sink again as post­elec­tion stock surge fades

Porterville Recorder - - BUSINESS - By MAR­LEY JAY

NEW YORK — Stocks in the U.S. slipped Thurs­day as the ninth con­sec­u­tive drop in crude oil prices hurt en­ergy com­pa­nies. U.S. mar­kets were com­ing off huge gains the day be­fore.

U.S. crude oil has now slumped more than 20 per­cent since early Oc­to­ber, meet­ing Wall Street's def­i­ni­tion of a "bear mar­ket."

Govern­ment fuel stock­piles have steadily ex­panded, push­ing sup­plies higher, and the U.S. is­sued waivers to a num­ber of coun­tries that buy oil from Iran. That al­lows those coun­tries to keep im­port­ing Ira­nian oil in spite of re­newed sanc­tions on that coun­try.

Most other groups of stocks fin­ished lit­tle changed. Banks made the largest gains. The Fed­eral Re­serve left in­ter­est rates where they are, but sug­gested it plans to keep rais­ing rates in re­sponse to the strong U.S. econ­omy.

Af­ter its steep plunge in Oc­to­ber, the S&P had risen for six of the seven days end­ing on Wed­nes­day. Stocks started sink­ing last month be­cause in­vestors wor­ried that the Fed was go­ing to raise in­ter­est rates to the point they slowed down eco­nomic growth. But John Lynch, chief in­vest­ment strate­gist at LPL Re­search, said he doesn't think that's go­ing to hap­pen and that the Fed will stop rais­ing rates in 2019.

"We do not be­lieve they will be as ag­gres­sive as many fear," he said. "We still don't have any­thing ap­proach­ing the wage pres­sures that have his­tor­i­cally scared the Fed."

The S&P 500 in­dex shed 7.06 points, or 0.3 per­cent, to 2,806.83 af­ter it jumped 2.1 per­cent Wed­nes­day. The Dow Jones In­dus­trial Aver­age inched up 10.92 points to 26,191.22.

The Nas­daq com­pos­ite dipped 39.87 points, or 0.5 per­cent, to 7,530.88 af­ter a 2.6 per­cent surge a day ear­lier. The Rus­sell 200 in­dex of smaller-com­pany stocks fell 3.95 points, or 0.2 per­cent, to 1,578.21.

Bench­mark U.S. crude oil fell 1.6 per­cent to $60.67 a bar­rel in New York. On Oct. 3 it closed at $76.41, the high­est level in al­most four years.

Brent crude lost 2 per­cent to $70.65 a bar­rel in Lon­don. Brent crude is the stan­dard for in­ter­na­tional oil prices and it has also fallen sharply over the last five weeks.

Exxon Mo­bil fell 1.6 per­cent to $81.71 and Cono­cophillips gave up 4.5 per­cent to $119.36.

Bond prices edged lower. The yield on the 10-year Trea­sury note rose to 3.24 per­cent, near its high­est level this year, from 3.23 per­cent. The Fed­eral Re­serve left in­ter­est rates where they are, but sug­gested it plans to keep rais­ing them in re­sponse to the strong U.S. econ­omy. The Fed has raised its key rate eight times since late 2015 and is ex­pected to do so again in De­cem­ber, with sev­eral more in­creases to fol­low.

Bank of Amer­ica rose 1.2 per­cent to $28.87 and M&T Bank added 1.2 per­cent to $167.37.

The Fed has been rais­ing rates to pre­vent in­fla­tion from get­ting out of hand. Lynch, of LPL, said that in­fla­tion isn't go­ing to get much stronger be­cause wages aren't go­ing to grow much faster than they cur­rently are. He said fac­tors like the re­tire­ment of more Baby Boomers, global com­pe­ti­tion, and slower eco­nomic growth in the U.S. will all limit in­creases in pay.

Chip­maker Qual­comm had a strong fourth quar­ter, but for the cur­rent pe­riod it's pro­ject­ing rev­enue of $4.5 bil­lion to $5.3 bil­lion, far be­low the $5.6 bil­lion an­a­lysts ex­pected, ac­cord­ing to Fac­tset. Its stock lost 8.2 per­cent to $58.05.

RICHARD DREW

AP PHOTO BY Spe­cial­ists Meric Green­baum, sec­ond left, works with traders at his post on the floor of the New York Stock Ex­change, Thurs­day, Nov. 8.

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