Benchmarks finished Thursday’s session mostly in the red as oil prices dropped and deadlock over Greek debt deal continued. While decline in oil prices dragged energy shares down, Germany’s rejection of Greece’s request for loan extension unnerved investors. However, the Nasdaq settled in positive territory banking on gains among chipmakers and bio-tech stocks. Priceline’s upbeat quarterly results also helped the Nasdaq settle in the green.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) declined 0.2%, to close at 17,985.77. The Standard & Poor 500 (S&P 500) lost 0.1% to end at 2,097.45. The tech-laden Nasdaq Composite Index closed at 4,924.70; increasing 0.4%. The fear-gauge CBOE Volatility Index (VIX) went down 1% to settle at 15.29. A total of about 3.2 billion shares were traded on NYSE on Thursday. Decliners outpaced advancing stocks on the NYSE. For 50% stocks that declined, 46% advanced.
Oil prices took a beating on Thursday. Prices of WTI crude oil dropped 1.9% to $51.16 per barrel. Additionally, Brent crude oil decreased 0.5% to settle at $60.21 a barrel. Oil prices fell after the U.S. Energy Information Administration reported U.S. commercial crude inventories increased by 7.7 million barrels to 425.6 million barrels during the week ended Feb 13.
Drop in oil prices had a negative impact on energy shares. The Energy Select Sector SPDR (XLE) declined 0.5%. Dow components Exxon Mobil Corporation (XOM – Analyst Report) and Chevron Corporation (CVX – Analyst Report) dropped 1.7% and 1.9%, respectively. Other key stocks from the sector including Schlumberger Limited (SLB – Analyst Report), Kinder Morgan, Inc. (KMI – Analyst Report), ConocoPhillips (COP – Analyst Report) and EOG Resources, Inc. (EOG – Analyst Report) decreased 0.9%, 0.4%, 0.5% and 1.6%, respectively.
The Utilities Select Sector SPDR (XLU) dropped 1.1%, the highest among the S&P 500 sectors. Key utilities stocks including Duke Energy Corporation (DUK – Analyst Report), NextEra Energy, Inc. (NEE – Analyst Report), Southern Company (SO – Analyst Report), Exelon Corporation (EXC – Analyst Report) and PPL Corporation (PPL – Analyst Report) decreased 2.2%, 1%, 1.4%, 1.4% and 0.7%, respectively.
On the other hand, gains among chipmakers and bio-tech stocks boosted the Nasdaq. While the PHLX Semiconductor Index advanced 0.3%, iShares NASDAQ Biotechnology Index (ETF) gained 0.8%. Upbeat quarterly results from The Priceline Group Inc. (PCLN – Analyst Report) also had a positive impact on the Nasdaq.
In other earnings news, Hormel Foods Corporation (HRL) posted first-quarter fiscal 2015 earnings per share of 69 cents, more than the Zacks Consensus Estimate of 64 cents. However, revenue of $2,395 million was less than the Zacks Consensus Estimate of $2,426 million. T-Mobile US, Inc. (TMUS) reported fourth quarter 2014 earnings per share of 12 cents that beat the Zacks Consensus Estimate of 9 cents. Shares of Hormel Foods and T-Mobile US both advanced 2.7%.
However, shares of Wal-Mart Stores Inc. (WMT) dropped 3.2%. It reported fourth quarter 2015 earnings per share of $1.61, beating the Zacks Consensus Estimate of $1.54. However, revenues of $131.6 billion were less than the Zacks Consensus Estimate of $132.2 billion.
Meanwhile, investors remained focused on the continuing deadlock between Greece and its creditors. Greece’s request for a six-month extension of the country’s loan agreement program was rejected by Germany. In a letter to Eurozone officials, Greece’s finance minister Yanis Varoufakis stressed that “any new measures be fully funded while refraining from unilateral action that would undermine the fiscal targets, economic recovery and financial stability.” Greece made it clear that it won’t abide by austerity measures which are part of the current bailout program.
Responding to the letter, a German finance ministry spokesman said it was “not a substantial proposal to resolve matters.” He added that it was an attempt to “bridge financing, without meeting the requirements of the programme. The letter does not meet the criteria agreed upon in the Eurogroup on Monday.” The Eurozone finance ministers are scheduled to meet again on Friday to resolve the ongoing Greek debt crisis.
Coming to domestic events, the Philadelphia Federal Reserve’s manufacturing index dropped to 5.2 in February in contrast to the consensus estimate of it rising to 8.8. The index was at 6.3 in January. Demand for manufactured goods as measured by current new orders index also slowed in February. However, current shipments improved. Separately, the Conference Board’s leading economic index increased 0.2% in January after it rose 0.4% in December. However, this was less than the consensus estimate of a rise by 0.3%.
Separately, the U.S. Department of Labor reported that claims for unemployment benefits declined in the week ending Feb 14 to 283,000 from previous week’s unrevised level of 304,000. This was also lower than the consensus estimate of 291,000.
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