By Wallace Witkowski and Ellie Ismailidou, MarketWatch
Consumer staples, health-care stocks lead losses; dollar
struggles to recover against yen
U.S. stocks closed lower Monday, relinquishing earlier gains on
lower-than-average volume, as oil futures rallied and the dollar
traded lower against most of its rivals.
Investors had been bracing for the start of the first-quarter
earnings season, which kicks off unofficially with the quarterly
results from Alcoa
(http://www.marketwatch.com/story/what-to-expect-from-alcoas-earnings-2016-04-08)
Inc. (AA).
The S&P 500 index closed down 5.61 points, or 0.3%, to
2,041.99, dragged down by the consumer-staples and health-care
sectors, both down 0.7% on the day. Earlier in the session, the
broad-market benchmark had up been as many as 15 points.
The Dow Jones Industrial Average fell 20.55 points, or 0.1%, to
close at 17,556.41, with shares of Nike Inc. (NKE) and Pfizer Inc.
(PFE) leading losses. Earlier, the blue-chip average had been up
155 points.
Meanwhile, the tech-heavy Nasdaq Composite Index dropped 17.29
points, or 0.4%, to close at 4,833.40. Earlier in the session, the
index had been up 47 points.
Monday's fluctuating price action is likely the result of
lower-than-average volume, which has tapered off since the February
selloff, said Paul Nolte, portfolio manager at Kingsview Asset
Management.
"I'm struggling to see where the buying interest is coming in,"
said Nolte. "With volume so low, it's pretty easy to push prices
around."
According to Dow Jones data, year-to-date average daily volume
for the NYSE Composite is 4.43 billion shares and for the Nasdaq is
2.05 billion shares. Month-to-date, the daily average has been 3.68
billion for the New York Stock Exchange and 1.73 billion for the
Nasdaq. By the close Monday, the NYSE stood at 3.38 billion shares
and the Nasdaq stood at 1.53 billion shares traded.
A rally in crude-oil futures
(http://www.marketwatch.com/story/crude-prices-higher-after-us-rig-count-adds-to-streak-of-declines-2016-04-11)
had boosted the main benchmarks earlier in the session, following a
recent trend of strong correlation between oil and stock prices,
but that unwound notably in the final hour of trading and stocks
ventured into negative territory.
Oil remained the "key market driver" on Monday, as firmer oil
prices were "trumping the prospects of a poor earnings season,
along with the absence of major economic reports today," said Peter
Cardillo, chief market economist at First Standard Financial.
A surge in gold prices
(http://www.marketwatch.com/story/gold-pushes-higher-to-log-best-settlement-in-3-weeks-2016-04-11)
boosted the stocks of gold miners, like Kinross Gold Corp. (KGC)
and AngloGold Ashanti Ltd. (AU) (AU)Gold continued to advance after
enjoying its best weekly gain in three weeks on Friday.
The dollar recovering against the Japanese yen also helped
stocks earlier, but that trend reversed over the course of the
session. The yen has recently been at the center of equity
selloffs, as yen strength has fueled risk aversion. The Japanese
currency is perceived as a haven in times of global economic
worries.
John Manley, chief equity strategist at Wells Fargo Advantage
Funds, called the dollar-yen relationship a "market mosquito
bite."
"Sometimes a mosquito bite can really grab your attention. But
in the long run, the dollar-yen will correct -- just not in a
straight line," Manley said, adding that the impact on equities and
risk aversion could become bigger in the short term if the Bank of
Japan steps in to weaken its currency by flooding the market with
yen.
Read:Japan can't be gentle with yen intervention
(http://www.marketwatch.com/story/japan-cant-be-gentle-with-yen-intervention-2016-04-08)
Yellen and Obama: Fed Chief Janet Yellen was scheduled to meet
President Obama at 3 p.m. Eastern in the Oval Office. The two will
discuss
(http://www.marketwatch.com/story/obama-yellen-to-meet-monday-to-talk-economy-2016-04-10)
"the state of the American and global economy, Wall Street reform,
and the long-term economic outlook, economic and regulatory
issues," the White House said in a statement.
Read:The U.S. economy--Goldilocks, it's not
(http://www.marketwatch.com/story/the-us-economy-goldilocks-its-not-2016-04-10)
Stocks to watch: Chesapeake Energy Corp.(CHK) shares surged 20%
after the company reached an amended agreement with its lenders
(http://www.marketwatch.com/story/chesapeake-amends-credit-facility-agreement-with-lenders-2016-04-11-91034841)that
allows it to borrow as much as $2.5 billion and offers relief on
some terms of its debt covenants.
Shares of Yahoo Inc. (YHOO) rose 1.1% after the U.K.'s Daily
Mail emerged as a possible bidder for the Internet group's assets,
The Wall Street Journal reported
(http://www.marketwatch.com/story/daily-mail-exploring-buyout-bid-for-yahoo-2016-04-11).
Telecom giant Verizon Communications Inc. (VZ) is also among a big
group of companies interested in Yahoo, as a deadline of April 18
looms for preliminary offers.
Shares of Hatteras Financial Corp. (HTS) surged 11% after Annaly
Capital Management Inc. (NLY) announced a deal to buy the fellow
real-estate investment trust for about $1.5 billion.
(http://www.marketwatch.com/story/annaly-capital-to-buy-hatteras-financial-for-15-billion-2016-04-11-710317)
Banks
"It's hard to argue against overall Street expectations for this
quarter being particularly low, and the interesting reports this
week will more than likely come out from the banks, which are
expected to be a front-runner for negative earnings growth this
period," said Jim Reid, strategist at Deutsche Bank, in a note to
clients on Monday.
Shares have badly lagged behind the broader market amid a
hesitancy by the Fed to raise interest rates off ultralow levels.
Lower rates can erode the gap between what banks make on loans and
how much they pay on deposits. Financial stocks have been the worst
performing sector this year, falling 7.3% year to date.
On Wednesday, J.P. Morgan Chase & Co. (JPM) will report
earnings. Wells Fargo & Co. (WFC) and Bank of America Corp.
(BAC) will follow on Thursday, and Citigroup Inc. (C) on
Friday.
Other markets:European stocks
(http://www.marketwatch.com/story/european-stocks-get-a-lift-from-italian-shares-2016-04-11)
rose, led by the banking sector, while Asia
(http://www.marketwatch.com/story/china-shares-aided-by-soft-inflation-data-but-strong-yen-hits-nikkei-2016-04-11)
had a mixed day. The Shanghai Composite Index finished 1.6% higher
after soft Chinese inflation data drove hopes that authorities will
act again to stimulate the economy. The Nikkei 225 index closed
down 0.4%, weighed by yen strength.
The yield on the benchmark 10-year Treasury note gained less
than a basis point to 1.723%. Yields move in the opposite direction
of prices.
--Barbara Kollmeyer in Madrid contributed to this article.
(END) Dow Jones Newswires
April 11, 2016 16:27 ET (20:27 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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