En­ergy, tech com­pa­nies help pull U.S. stocks broadly lower

The Denver Post - - BUSINESS - By Alex Veiga

NEW YORK» En­ergy stocks led a broad slide on Wall Street on Thurs­day as oil and gas prices fell, hand­ing the mar­ket its sec­ond con­sec­u­tive loss.

Losses in tech­nol­ogy and com­mu­ni­ca­tions stocks also helped power the sell-off, off­set­ting gains in health care and real estate com­pa­nies. Banks also rose, get­ting a boost from ris­ing bond yields, which al­low len­ders to charge higher in­ter­est on loans.

The mar­ket’s down­ward tilt came as in­vestors con­tin­ued to weigh re­marks on Wed­nes­day by the head of the Federal Re­serve that ap­peared to dim prospects for an in­ter­est rate cut this year.

“You got a con­tin­u­a­tion of what you saw yes­ter­day,” said Wil­lie Del­wiche, an in­vest­ment strate­gist at Baird. “You saw stock mar­ket weak­ness, you saw bond yields ris­ing and you saw the Fed funds fu­tures con­tin­u­ing to shift away from pric­ing in a rate cut in the near fu­ture.”

The S&P 500 in­dex fell 6.21 points, or 0.2 per­cent, to 2,917.52. The Dow Jones industrial av­er­age dropped 122.35 points, or 0.5 per­cent, to 26,307.79. The Nas­daq com­pos­ite, which is heav­ily weighted with tech­nol­ogy com­pa­nies, slid 12.87 points, or 0.2 per­cent, to 8,036.77.

Smaller com­pany stocks fared bet­ter. The Russell 2000 in­dex rose 6.27 points, or 0.4 per­cent, to 1,582.65.

Ma­jor in­dexes in Europe fin­ished mostly lower.

The S&P 500 in­dex is up 16.4 per­cent for the year and notched three con­sec­u­tive all-time highs be­fore fin­ish­ing lower Wed­nes­day af­ter the re­marks by Federal Re­serve Chair Jay Pow­ell.

In those re­marks, Pow­ell played down the possibility of an in­ter­est rate cut this year and re­stated the cen­tral bank’s mes­sage that there will likely be no rate hikes in 2019.

Those com­ments made it seem like in­vestors had a “less sup­port­ive Fed” than they an­tic­i­pated, said Brad McMil­lan, chief in­vest­ment of­fi­cer for Com­mon­wealth Financial Net­work. McMil­lan noted that a pull­back in stocks was likely be­cause they have been gaining so much over the last few weeks.

“We ran up to new highs again, and I think the mar­kets are get­ting a little bit nervous about that,” he said.

The U.S. stock mar­ket has been rid­ing high this year as it’s made its way back from a nose­dive at the end of 2018. The Fed spurred the mar­ket’s recovery ear­lier this year when it sig­naled that it would take a pa­tient ap­proach to rais­ing in­ter­est rates.

A slide in crude oil prices Thurs­day helped drag down en­ergy stocks. The sec­tor fell 1.7 per­cent, more than triple the de­clines in the tech­nol­ogy and com­mu­ni­ca­tions sec­tors.

Bench­mark U.S. crude fell 2.8 per­cent to set­tle at $61.81 per bar­rel. Brent crude, the in­ter­na­tional stan­dard, dropped 2 per­cent to close at $70.75.

Marathon Oil dropped 6.1 per­cent af­ter the com­pany re­ported rev­enue that fell short of estimates.

Tech­nol­ogy stocks, the biggest gain­ers this year, also weighed on the mar­ket. Cog­nizant Tech­nol­ogy Solutions led the sec­tor’s de­clin­ers, los­ing 7.7 per­cent. Mi­crosoft fell 1.3 per­cent.

Among me­dia com­pa­nies, Fox Corp. and Dis­cov­ery Inc. each fell more than 5 per­cent.

In­vestors were treated to a mostly mixed batch of cor­po­rate earn­ings re­ports Thurs­day.

Fluor was the biggest loser in the S&P 500. The en­gi­neer­ing and con­struc­tion com­pany plunged 24.1 per­cent af­ter it re­ported a huge quar­terly loss and is­sued an earn­ings fore­cast that was far below what an­a­lysts were ex­pect­ing.

Sports ap­parel com­pany Un­der Ar­mour gained 3.5 per­cent af­ter it re­ported first-quar­ter re­sults that beat Wall Street fore­casts. It also raised its profit fore­cast for 2019.

On­line games maker Zynga climbed 5.6 per­cent af­ter rais­ing its rev­enue fore­cast for the year.

Earn­ings re­port­ing sea­son is more than a third of the way through, and the re­sults have been bet­ter than in­vestors had ex­pected. An­a­lysts had been pre­dict­ing a slump in prof­its, and their worst fears have not ma­te­ri­al­ized.

Bond prices fell. The yield on the 10-year Trea­sury note, which in­flu­ences mort­gages and some other loans, rose to 2.54 per­cent from 2.51 per­cent late Wed­nes­day.

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