By Ellie Ismailidou and Sara Sjolin, MarketWatch
ISM services index disappoints; Yahoo, Chipotle tumble on weak
earnings
The Dow Jones Industrial Average swung sharply higher Wednesday
afternoon, as a surge in oil prices boosted energy and materials
stocks in a session marked by wild shifts.
The Dow industrials erased a 120-point drop to trade 145 points
higher, or 0.9%, at 16,309. The S&P 500 was up 6 points, or
0.3%, to 1,909, led by the energy and materials sectors. The Nasdaq
Composite pared earlier losses but remained negative territory,
down 9 points, or 0.1%, to trade at 4,510.
Earlier in the sessions, the stock market seemed to break its
recent strong correlation with the gyrations in oil prices , as the
main stock indexes tumbled despite a rebound of more than 3% by oil
futures . Weighing on equities was a sharp decline in financials,
featuring giants like Morgan Stanley (MS), Citigroup Inc. (C) and
Bank of America Corporation (BAC)
But as oil futures extended gains
(http://www.marketwatch.com/story/crude-prices-stuck-under-30-as-market-braces-for-stockpile-surge-2016-02-03),
rising more than 8%, stocks staged a strong rebound rally, led by
energy names and helping the SPDR Financial Select Sector (XLF)
pare earlier losses. Read: Bank stocks rocked by recession fears
(http://www.marketwatch.com/story/bank-stocks-rocked-by-recession-fears-2016-02-03)
The energy sector was the best performer on the S&P 500, up
3.6%. Energy names (XLE) were among the Dow industrials' best
performers, led by Exxon Mobil Corp. (XOM).
More broadly, the market has been in a tug of war between the
strong rebound in oil prices and a flurry of weaker-than-expected
economic data on the other hand, which was stoking fears of a
slowdown in the U.S. economy.
Earlier in the session, the 10-year Treasury yield, the Treasury
market's benchmark , tumbled to a one-year low, reflecting the
risk-off sentiment and worries over an economic slowdown.
Read: Tumbling Treasury yields point to lower rates for longer
(http://www.marketwatch.com/story/tumbling-treasury-yields-point-to-lower-rates-for-longer-2016-02-03)
Worries about the banking sector were rooted in concerns about
how banks' balance sheets are affected by negative interest rates
in the eurozone as well as by widening credit spreads and rising
default rates in the U.S., said Mike Antonelli, equity sales trader
at R.W Baird & Co.
The U.S. service sector, which includes companies in the retail,
banking and health-care sectors, grew in January at the slowest
pace in almost two years
(http://www.marketwatch.com/story/biggest-part-of-us-economy-not-growing-as-fast-ism-finds-2016-02-03),
the Institute for Supply Management said Wednesday.
Separately, a private-sector employment report by
payroll-services firm ADP pointed to solid job growth
(http://www.marketwatch.com/story/private-sector-hiring-points-to-solid-job-growth-despite-market-turmoil-adp-2016-02-03)
in January but weaker than the previous month.
Economists use ADP's private-sector data as a lead-up to the
Labor Department's Friday jobs report.
"Bottom line, no job growth in manufacturing and job losses in
energy are certainly being offset by other areas of the economy,
particularly services. This begs the question over sustainability,"
said Peter Boockvar, chief market analyst at The Lindsey Group, in
emailed comments.
Wednesday's stock selloff came after Wall Street ended sharply
lower on Tuesday
(http://www.marketwatch.com/story/us-stocks-dow-futures-drop-by-more-than-100-points-hurt-again-by-oils-slide-2016-02-02),
as investors unloaded energy and financial stocks following a
selloff in crude-oil futures, which settled below $30 a barrel.
The market is "in the midst of some midstream adjustments," said
James Meyer, chief investment officer at Tower Bridge Advisors.
These adjustments result in "volatility without direction. Markets
go up 2% one day and down 2% the next. There will be times in this
transition period when markets might move 10% or more in one
direction," he said.
Movers and shakers: Shares of Yahoo! Inc. (YHOO) dropped 5%
after the Internet services company late Tuesday reported a loss
for the fourth quarter
(http://www.marketwatch.com/story/yahoo-beats-on-sales-and-axes-workforce-by-15-2016-02-02).
Chipotle Mexican Grill Inc. (CMG) lost 3% after the Mexican fast
food chain late Tuesday posted its first-ever sales decline
(http://www.marketwatch.com/story/chipotle-posts-first-ever-sales-decline-2016-02-02-164855353).
U.S.-listed shares of chemical company Syngenta AG (SYNN.VX)
climbed 2% after China National Chemical Corp. offered to buy the
Swiss firm for $43 billion in cash
(http://www.marketwatch.com/story/chemchina-to-buy-syngenta-in-43-billion-deal-2016-02-03).
Merck & Co. Inc. (MRK) fell 1.7% after the drugmaker said
fourth-quarter sales fell short of estimates
(http://www.marketwatch.com/story/merck-tops-profit-estimates-but-sales-fall-slightly-short-2016-02-03).
Comcast Corp. (CMCSA)shares gained 4.8% after the company
reported increased revenue
(http://www.marketwatch.com/story/comcast-q4-revenue-grows-as-2015-films-flourish-cable-sub-losses-slow-2016-02-03).
Mondelez International Inc. (MDLZ) lost 7.3% after the company
swung to a fourth-quarter loss
(http://www.marketwatch.com/story/mondelez-posts-loss-on-venezuela-related-charges-2016-02-03),
hurt by a big one-time charge related to its Venezuela
business.
Other markets: Stocks in Asia closed sharply lower, with Japan's
Nikkei down 3.2%. European markets also ended lower
(http://www.marketwatch.com/story/european-stocks-tilt-lower-as-focus-turns-to-us-jobs-figures-2016-02-03)
for a third session in a row, led by losses for banks. The dollar
fell, on track for its largest one-day drop versus the euro in two
months. Metals rose across the board, with gold up 1%.
(END) Dow Jones Newswires
February 03, 2016 15:38 ET (20:38 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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