The Morning Journal (Lorain, OH)
U.S. stock indexes hold steady as oil’s dismal week eases
NEW YORK » U.S. stock indexes held steady Thursday after the price of oil halted its slide, at least for now.
Energy stocks fell again, but not by nearly as much as earlier in the week, after crude rose for the first time in four days. Big gains for health care stocks also helped to offset losses for financial companies and other areas of the market, leaving indexes close to flat.
The Standard & Poor’s 500 index edged down by 1.11 points, or less than 0.1 percent, to 2,434.50. The Dow Jones industrial average dipped 12.74, or 0.1 percent, to 21,397.29, and the Nasdaq composite index rose 2.73 points, or less than 0.1 percent, to 6,236.69.
Markets this week have been dominated by oil’s tumbling price and worries about how much it will affect the broader market. Benchmark U.S. crude rose 21 cents to settle at $42.74 per barrel, and Brent crude, the international standard, added 40 cents to $45.22 per barrel. It may not sound like much, but it’s a big shift in momentum from earlier in the week, when oil dropped to its lowest level since August on expectations that supplies will exceed demand.
Energy stocks in the S&P 500 dipped by 0.1 percent, a much milder drop than the prior two days, when they fell at least 1.2 percent.
Helping to support indexes were health care stocks, which have been shooting higher this week even as the rest of the market struggled. Health care stocks in the S&P 500 jumped 1.1 percent, by far the biggest gain among the 11 sectors that make up the index, after the Senate unveiled its proposal to revamp how Americans get medical care. The sector is up 3.7 percent for the week when the overall index is up just 0.1 percent.
Envision Healthcare, which provides physician and ambulance services, jumped $2.06, or 3.5 percent, to $60.30. HCA Healthcare, which owns hospitals around the country, rose $2.09, or 2.5 percent, to $86.14, and biopharmaceutical company Gilead Sciences added $2.98, or 4.4 percent, to $70.48.
Expectations used to be high that big changes coming out of Washington, such as lower tax rates, would help businesses make bigger profits and markets to rise higher. That’s much less the case today.
“Expectations have gotten so low, as far as what’s going to come out of this administration,” said Jon Adams, senior investment strategist at BMO Global Asset Management.
“Most think some kind of health reform will get done, but tax reform is a coin flip, and the expectation is it will be very, very modest if it does get through.”
The stock market has remained resilient, but the “Trump bump” has faded for other areas as expectations have waned. Interest rates have dropped, and small-cap stocks are lagging behind their larger rivals, for example.
But that means if a big tax-reform package and other pro-business policies do happen, it could mean big gains for markets that don’t see them coming, Adams said.
The day’s biggest gainer in the S&P 500 was Oracle, which jumped $3.97, or 8.6 percent, to $50.30 after reporting stronger revenue and earnings for its latest quarter than analysts expected. Technology companies are expected to report some of the strongest earnings growth for the April-through-June quarter, one of the reasons their stocks have been leading the market this year.