By Ellie Ismailidou and Carla Mozee, MarketWatch
Bank stocks crumble; Janet Yellen testimony looms
U.S. stocks struggled to push higher Tuesday, amid a global
equity selloff that hit Japanese stocks particularly hard and was
fueled by declines in oil prices and fears of economic
slowdown.
All three main benchmarks opened in negative territory and were
dipping in and out of positive territory after the opening
bell.
The S&P 500 was up less than a point, or less than 0.1%, at
1,853. The Dow Jones Industrial Average was down 12 points, or
0.1%, at 16,013. The Nasdaq Composite was up 11 points, or 0.3% to
4,296.
Pressure on oil prices and continuing worries about a slowdown
in global economic growth were behind the global stock selloff. It
began in Japan, where the Nikkei Stock Average closed more than 5%
lower, its biggest decline since 2013, and the 10-year Japanese
benchmark yield fell into negative territory for the first time
ever.
A drop in bank shares amid worries about the impact of
record-low interest rates and deteriorating credit conditions on
banks' balance sheets was another early theme. Bank giants Goldman
Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM) were
leading the Dow industrials decliners after the opening bell.
As oil prices declined, the energy sector was the worst
performer on the S&P 500, down 1.4%, followed closely by
telecommunications, down 1.2%.
Oil prices
(http://www.marketwatch.com/story/oil-rises-as-downbeat-iea-report-fails-to-add-to-pessimism-2016-02-09)
rose early Tuesday, shrugging off a downbeat report from the
International Energy Agency
(http://www.marketwatch.com/story/iea-warns-oil-surplus-will-be-worse-than-expected-2016-02-09),
but later gave up their gains. Brent oil also turned lower.
Read:Oil industry woes grow as storage levels hit 'critical
level'
(http://www.marketwatch.com/story/oil-industry-woes-grow-as-storage-levels-hit-critical-level-2016-02-08)
Companies in the energy space with balance-sheet issues continue
to get severely punished, said Tim Anderson, managing director at
MND Partners. He cited Chesapeake Energy corp. (CHK), which was
flat Tuesday after plunging 33% on Monday, and Williams Companies
Inc. (WMB), which recovered 7% in early trade after a 35% loss
Monday.
If the "quality names" in the oil sector, namely "big
multinationals positioned to survive any shakeout" can outperform
the commodity "today, and maybe throughout the week it could be an
early sign of a change in sentiment toward the sector," Anderson
said.
U.S. stocks finished sharply lower Monday, but off their worst
levels.
(http://www.marketwatch.com/story/oil-industry-woes-grow-as-storage-levels-hit-critical-level-2016-02-08)On
Monday,
(http://www.marketwatch.com/story/dow-futures-drop-200-points-setting-wall-street-up-for-an-ugly-start-2016-02-08)
the Nasdaq Composite fell 1.8% on heavy losses for shares of
Facebook Inc. (FB) and Amazon Inc. (AMZN). The S&P 500 fell
1.4% and the Dow Jones Industrial Average stumbled 178 points, or
1.1%.
Read:Why a few money-making tech stocks won't make up for the
big losers
(http://www.marketwatch.com/story/why-a-few-money-making-tech-stocks-wont-make-up-for-the-big-losers-2016-02-09)
"[I]t's going to be a case of watching Wall Street to see if the
gains we saw coming in towards the close last night can be
extended," said Tony Cross, market analyst at Trustnet Direct, in a
note.
"This really could go either way, but building fears of a global
slowdown do seem to have the potential to push back the next round
of U.S. rate hikes. Anything that adds weight to this argument can
only mean more good news for stocks," he said.
Yellen ahead: The moves come ahead of the marquee event for U.S.
markets this week: Fed Chairwoman Yellen's semiannual testimony
before House and Senate committees on Wednesday and Thursday.
"The market is starting to price out any more rate hikes from
the Fed in 2016, let alone at the March meeting. Anything from
Janet Yellen that confirms or denies that thinking will see markets
react as the feeling that the Fed acted too early in December
continues to grow," said James Hughes, chief market analyst at
GKFX, in a note.
Read:Five questions Janet Yellen must answer
(http://www.marketwatch.com/story/five-questions-janet-yellen-must-answer-2016-02-09)
Economic data: The U.S. job openings, or JOLTS, report for
December is due at 10 a.m. Eastern Time. Yellen has said she pays
close attention to the quit rate, a proxy of worker confidence,
included in the report.
Also at 10 a.m. Eastern, the Commerce Department's report on
wholesale inventories in December is expected.
Earnings: Ahead of the bell, Coca-Cola Co. (KO) reported
fourth-quarter revenue
(http://www.marketwatch.com/story/coca-cola-revenue-beats-but-profit-falls-short-2016-02-09)
of $10 billion, above expectations of $9.9 billion, but per-share
earnings of 28 cents were below Wall Street's forecast of 37 cents.
Coke slipped 0.3% after the opening bell.
Drugstore chain operator CVS Health Corp. (CVS) tumbled 2.4%
after the company posted fourth-quarter sales and profit that met
expectations
(http://www.marketwatch.com/story/cvs-growth-boosted-by-acquisitions-pharma-2016-02-09).
Wendy's Co.'s (WEN) preliminary fourth-quarter adjusted profit
(http://www.marketwatch.com/story/wendys-profit-revenue-beats-expectations-2016-02-09)
of 12 cents a share beat expectations and the company anticipates
same-store sales growth above what analysts were projecting.
Wendy's shares inched 0.5% lower.
Sears Holdings Corp. (SHLD) lost 0.8% after the company warned
its fourth-quarter revenue would fall short
(http://www.marketwatch.com/story/sears-warns-on-sales-to-speed-up-store-closures-2016-02-09)
of expectations, prompting the retailer to accelerate store
closures and make deeper cost cuts.
Goodyear Tire and Rubber Co. (GT) climbed 2% despite the
company's report of a fourth-quarter loss
(http://www.marketwatch.com/story/goodyear-posts-loss-as-it-books-charges-2016-02-09)
as a write-down of the company's Venezuela operations, currency
fluctuations and a one-time tax benefit the previous year masked
financial results that beat analyst estimates.
After the bell, Tesla Motors Inc. (TSLA) is forecast to report
adjusted fourth-quarter earnings of 16 cents a share. Read:Tesla
earnings: Model 3 spending, Model X sales in focus
(http://www.marketwatch.com/story/tesla-earnings-model-3-spending-model-x-sales-in-focus-2016-02-05)
Other markets:Bank shares fell
(http://www.marketwatch.com/story/european-stocks-get-clobbered-again-as-banks-slump-2016-02-09)
in Europe amid a broad drop in European stock markets. Investors
seeking safety pushed the yen higher against the U.S. dollar
(http://www.marketwatch.com/story/panicked-investors-flock-to-the-yen-shredding-the-dollar-2016-02-09),
and a rush to Japanese bonds drove the yield on the benchmark
10-year government bond into negative territory for the first
time.
Gold prices turned down, trading below $1,200 an ounce.
(END) Dow Jones Newswires
February 09, 2016 10:01 ET (15:01 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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