By Ellie Ismailidou and Sara Sjolin, MarketWatch
Energy stocks slump, Valeant jumps after confirming plans for
reorganization
The Nasdaq Composite narrowly logged its second record close of
2016 on Tuesday, as losses in oil prices and weak productivity data
all but erased gains for the broad benchmarks.
The S&P 500 index ended up less than a point at 2,181.74,
after setting a record high of 2,187.69 earlier in the day. Gains
in health-care and consumer-staples stocks were offset by losses in
energy and materials sectors, weighed down by the drop in oil
prices.
The Dow Jones Industrial Average closed up 3.76 points, or less
than 0.1%, at 18,533, supported by gains for Walt Disney
Company(DIS) and Pfizer Inc. (PFE) but weighed down by a 0.7%
decline in E.I. DuPont de Nemours & Co.(DD). The blue-chip
gauge ended 0.3% below the all-time closing high of 18,595.03
established on July 20.
The Nasdaq Composite Index gained 12.34 points, or 0.2%, to
5,225.48--an all-time closing high.
Wall Street struggled to shrug off a weaker-than-expected report
on U.S. productivity, which has now declined in three straight
quarters, according to new data released Tuesday
(http://www.marketwatch.com/story/productivity-declines-for-third-straight-quarter-2016-08-09).
Second-quarter productivity unexpectedly fell 0.5%, well below
expectations.
But a thirst for yield-rich assets continued to support demand
for stocks, analysts said, despite falling corporate earnings and
unsteady economic fundamentals.
"Investors are chasing [yield] anywhere they can find it. As
long as companies keep paying dividends, they're fine. But some are
paying out more than they're earning," said Lamar Villere, a
portfolio manager at investment manager Villere & Co.
Another reason for the sluggish but sustained advance is that
many investors are "hiding out" in the U.S. equity market, piling
into sectors traditionally viewed as safety plays in times of
uncertainty, such as utilities and telecom--two sectors that are
leading the market year-to-date. Telecom is up 19.4% year to date,
while utilities boast a 16.7% gain in 2016.
At the same time, the market has been "quite boring for nearly a
month now, which we can easily blow off as being part of the summer
doldrums," said Frank Cappelleri, technical analyst at Instinet, in
emailed comments.
Cappelleri said investors should view the muted summer moves as
a positive indication that the market is settling into a new
trading range, after breaking out to all-time high levels.
"Low volatility is a classic trait of an uptrend. And uptrends
are boring whether they happen in August or a typically more
emotional period," Cappelleri said, pointing to the market's
seeming inaction in November 2014 as a "classic example" of a
"boring" market showing a positive uptrend.
Some investors were also holding on to lingering optimism
following the stellar jobs report released on Friday, which helped
propel the S&P 500 and the Nasdaq score record highs.
"This mood of optimism has seen a recovery in not only the
dollar, but also risk appetite, that has pulled equities and
commodities such as oil higher. But can these moves continue with a
stronger dollar?" said Richard Perry, analyst at Hantec Markets, in
a note.
Economic news: A flurry of data released on Tuesday painted a
mixed picture of the U.S. economy.
Wholesale inventories rose a revised 0.3% in June, up from the
initial estimate of no change, the Commerce Department said Tuesday
(http://www.marketwatch.com/story/us-wholesale-inventories-rise-revised-03-in-june-2016-08-09),
suggesting that inventories might not be as big a drag on
second-quarter growth as initially estimated.
The NFIB small-business index for July rose 0.1 point to 94.6
(http://www.marketwatch.com/story/small-business-sentiment-ekes-out-a-gain-nfib-says-2016-08-09),
continuing a winning streak that began after it touched a two-year
low.
There are no Federal Reserve speakers this week. The next big
event for the central bank will be Chairwoman Janet Yellen's
appearance at the Jackson Hole conference on Aug. 26.
See:
Movers and shakers: Shares of Resolute Energy Corp.(REN) rallied
16.9% after the oil and gas company late Monday said its loss
narrowed in the second quarter.
Valeant Pharmaceuticals International Inc.(VRX.T) jumped 25.4%
after the drugmaker confirmed its full-year guidance and said it
would reorganize following another weak quarter
(http://www.marketwatch.com/story/valeant-loss-widens-as-company-plans-overhaul-2016-08-09).
Luxury retailer Coach Inc.(COH) posted fiscal fourth-quarter
earnings that beat expectations
(http://www.marketwatch.com/story/coachs-stock-surges-after-profit-north-american-sales-beat-expectations-2016-08-09),
but shares slumped 2.2%.
Walt Disney Co.(DIS), Fossil Group Inc.(FOSL) and Yelp
Inc.(YELP) were slated to report earnings after the close.
Shares in Gap Inc.(GPS) lost 6.3% Tuesday after the clothing
retailer said revenue and same-stores sales slipped
(http://www.marketwatch.com/story/gap-shares-drop-after-sales-slip-same-store-sales-decline-2016-08-08)
in July.
Monster Worldwide Inc.(MWW) rallied 26.4% after Dutch staffing
provider Randstad Holding NV (RAND.AE) said it has agreed to buy
its rival for $3.40 a share in cash
(http://www.marketwatch.com/story/randstad-agrees-to-buy-monster-in-merger-worth-429-million-2016-08-09),
a 22.7% premium on Monday's closing price.
Other markets: Oil priced reversed and closed lower
(http://www.marketwatch.com/story/oil-prices-walk-back-from-sharp-rally-with-focus-on-us-data-2016-08-09)
after a sharp rally on Monday, falling 0.6%.
Metals lost ground across the board, while the dollar traded
mixed
(http://www.marketwatch.com/story/dollar-flattens-out-ahead-of-japan-holiday-2016-08-09)
against other major currencies. The pound slumped to $1.2976, after
data showed the U.K. trade deficit widened in June
(http://www.marketwatch.com/story/uk-trade-deficit-widened-before-brexit-vote-2016-08-09)
as imports hit a record high.
Stock markets in Europe shook off opening losses
(http://www.marketwatch.com/story/european-markets-gain-across-the-board-as-opec-meeting-cheers-oil-stocks-2016-08-09)
and ended higher, while Asian stocks ended mostly higher after
upbeat data from China
(http://www.marketwatch.com/story/asian-stocks-mostly-up-despite-weak-economic-news-from-china-2016-08-08).
(END) Dow Jones Newswires
August 09, 2016 16:28 ET (20:28 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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