By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
Jobless claims miss expectations; L Brands, FitBit, Tesla, Merck
tumble on weak earnings
U.S. stocks turned negative Thursday afternoon, on track for a
third session of declines, as a rally in oil futures lost steam
while a stronger dollar, weak economic data and disappointing
earnings weighed on risk appetite.
The S&P 500 index lost 3 points, or 0.2%, to 2,048, led by a
0.7% drop in utilities. The energy and health-care sectors were the
only ones in positive territory, up 0.5% and 0.2% respectively.
The Dow industrials fell 15 points, or 0.1%, to 17,637, weighed
by a 2.2% drop in Merck
(http://www.marketwatch.com/story/merck-beats-profit-expectations-bumps-up-full-year-guidance-range-2016-05-05)(MRK),
which tumbled after weak results, and a 2% drop in Caterpillar
Inc.(CAT) . International Business Machines Corp. (IBM), up 1.3%,
was leading the gains.
The Nasdaq Composite fell 11 points, or 0.2%, to 4,714.
Earlier, stocks had logged modest gains, boosted by a surge in
oil prices on worries that wildfires raging in Alberta could
hamstring crude supply, as they disrupted output from Canada's oil
sands industry
(http://www.marketwatch.com/story/oil-prices-rise-as-canadian-wildfire-threatens-output-2016-05-05).
See also: How a raging inferno in Alberta is hobbling oil
production
(http://www.marketwatch.com/story/how-a-raging-inferno-in-alberta-is-hobbling-oil-production-2016-05-05)
But stocks moved lower as the oil rally lost steam. Weak data on
the U.S. labor market and a strong dollar also weighed on risk
appetite.
"We're in this stall-speed market, where sentiment can only take
us so far before the data smack us in the face," said Mike
Antonelli, equity sales trader at R.W Baird & Co.
According to Antonelli, investors were getting worried by the
dollar's
(http://www.marketwatch.com/story/dollar-set-to-gain-against-euro-yen-for-a-3rd-day-2016-05-05)
three-day sharp advance and were reluctant to buy stocks ahead of
Friday's closely-watched official jobs report.
On Thursday, data showed the number of Americans who applied for
unemployment benefits
(http://www.marketwatch.com/story/us-jobless-claims-climb-17000-to-274000-2016-05-05)
at the end of April rose to a five-week high, missing economists'
expectations.
The jobless-claims data came one day after a
weaker-than-expected report on private-sector payrolls and a
decline in worker productivity, which pushed stocks to finish lower
on Wednesday
(http://www.marketwatch.com/story/us-stock-futures-mired-in-red-with-private--payrolls-data-on-tap-2016-05-04).
Still, the fact that the main benchmarks are still trading in a
range could suggest that evidence of weakness in the labor market
is viewed as justification for the Federal Reserve to delay further
interest-rate hikes this year, particularly since inflation remains
subdued
(http://www.marketwatch.com/story/heres-why-inflation-might-be-this-markets-bogeyman-2016-05-05),
said Jeff Carbone, managing director at wealth manager Cornerstone
Financial Partners.
Meanwhile, analysts were watching key technical indicators that
were flashing warning signals, most notably that the S&P is now
noticeably below its 20-day moving average. Wednesday, the index
fell more than 3% below its recent highs, a drop that last occurred
in November.
The slow, yet consistent selloff over the past two weeks has
kept the S&P confined to a "clear downward sloping channel,"
said Frank Cappelleri, technical analyst at Instinet, in emailed
comments.
"While not a crash by any means, the recent action has altered
the market's complexion," Cappelleri said. "This was inevitable, of
course. Now the market must prove it can take a punch, which could
prove challenging."
Data and Fed speakers: Fed officials maintained a slightly more
hawkish tone, which first reemerged in remarks late last week.
San Francisco Fed President John Williams said Thursday two or
three interest rate increases this year is "reasonable," but the
U.S. central bank will continue to watch economic data, during an
interview with CNBC.
(http://www.cnbc.com/2016/05/05/feds-williams-all-the-data-pointing-to-the-right-direction-in-the-labor-market.html)
St. Louis Fed President James Bullard said weak economic growth
caused him to moderate his support for a rate hike at the Fed's
April meeting. He stressed that all options are on the table for
the Fed's upcoming meeting in June
(http://www.marketwatch.com/story/feds-bullard-says-weak-growth-led-him-to-dial-back-support-of-april-rate-hike-2016-05-05).
Williams and Bullard will also appear on a panel on
"international monetary policy and reform in practice" at the
Hoover Institute conference in Stanford University at 7:15 p.m.
Eastern.
Stocks to watch:Tesla
(http://blogs.marketwatch.com/thetell/2016/05/04/tesla-results-to-include-model-x-sales-model-3-prep-live-blog/)(TSLA)
fell 5.6% despite the fact that the electric-car maker posted a
narrower-than-expected first-quarter adjusted loss and sales that
were in line with Wall Street's forecasts late Wednesday.
Read:Elon Musk promises Tesla will do the improbable (or even
impossible)
(http://www.marketwatch.com/story/elon-musk-promises-tesla-will-do-the-improbable-or-even-impossible-2016-05-04)
Alibaba
(http://www.marketwatch.com/story/alibabas-stock-surges-as-sales-beat-offsets-profit-miss-2016-05-05)(BABA)
gained 3.8% after strong results.
L Brands Inc. (LB) plunged 10.4% after the retailer reported
fiscal first-quarter sales that missed expectations.
And Fitbit Inc
(http://www.marketwatch.com/story/fitbit-shares-plunge-on-weak-quarterly-outlook-2016-05-04).(FIT)
plunged 17.4% on a weak quarterly outlook.
Avon Products Inc.(AVP) fell 1.4% after reporting that its loss
worsened in the most recent quarter
(http://www.marketwatch.com/story/avon-loss-widens-on-dollar-and-restructuring-costs-2016-05-05).
SeaWorld Entertainment Inc.(SEAS) fell 5.7% after the company,
which recently said it would abandon breeding its signature killer
whales, announced Thursday that a measure of profit for the year
would land below analysts' expectations
(http://www.marketwatch.com/story/seaworld-shares-drop-on-soft-outlook-2016-05-05).
Kellogg Co. (K) fell 2.6% after the food company said sales fell
short of estimates
(http://www.marketwatch.com/story/kellogg-reports-quarterly-sales-decline-largely-due-to-venezuela-business-2016-05-05).
Whole Foods Market Inc
(http://www.marketwatch.com/story/whole-foods-market-cuts-annual-guidance-2016-05-04-17485469).(WFM)
gained 4.9% after the company cut its annual guidance, though
profit slight beat Wall Street forecasts. Kraft Heinz Co
(http://www.marketwatch.com/story/kraft-heinz-rallies-as-first-quarter-earnings-beat-expectations-2016-05-04).(KHC)
rose 4.2% after better-than-expected earnings.
After the close, Square Inc.(SQ), GoPro Inc.(GPRO), FireEye
Inc.(FEYE), News Corp(NWS.AU), which owns MarketWatch, the
publisher of this report, Yelp Inc.(YELP), DreamWorks Animation SKG
Inc.(DWA) and Herbalife Ltd.(HLF) will report.
AT&T Inc.(T) unwound a 15-year partnership with Yahoo
Inc.(YHOO) and awarded the contract to Web and mobile portals to
Synacor Inc.(SYNC).
Alphabet Inc.'s(GOOGL) YouTube will be offering a paid
subscription bundle of streaming TV channels as soon as next year,
Bloomberg News reported on Wednesday
(http://www.marketwatch.com/story/youtube-reportedly-planning-streaming-tv-service-2016-05-04).
Other markets:Asian markets
(http://www.marketwatch.com/story/asian-stocks-stymied-by-weak-china-services-data-2016-05-05)
had a mostly lackluster session, with appetite for equities
dampened by news that China's service activity grew at a slower
pace in April. Fears over slowing economic growth world-wide has
been a factor in driving down global equity prices this week.
European stocks
(http://www.marketwatch.com/story/european-stocks-break-four-day-losing-run-as-oil-prices-rally-2016-05-05)
snapped a four-day losing streak, led by gains for major oil
producers.
Gold prices fell 0.2%, to $1,271.60 an ounce.
(END) Dow Jones Newswires
May 05, 2016 14:01 ET (18:01 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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