Benchmarks finished mostly lower on Thursday after stronger US dollar adversely affected oil and other commodity prices, dragging down energy and material stocks. The U.S dollar rebounded on Thursday after a sharp decline on Wednesday. While the S&P 500 and the Dow ended in negative territory, gains among bio-tech stocks and Facebook helped the Nasdaq close in the green.
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The Dow Jones Industrial Average (DJI) declined almost 0.7% to close at 17,959.03. The Standard & Poor’s 500 (S&P 500) lost 0.5% to 2,089.27. The tech-laden Nasdaq Composite Index closed at 4,992.38; increasing 0.2%. The fear-gauge CBOE Volatility Index (VIX) gained 0.7% to settle at 14.07. A total of about 3.3 billion shares were traded on Thursday on the NYSE. Decliners outpaced advancing stocks on the NYSE. For 62% stocks that declined, 34% advanced.
The greenback staged a comeback on Thursday and traded at $1.0653 against the euro, compared to $1.0831 on Wednesday. The dollar strengthened against major currencies after it had weakened on Wednesday following an unexpected dovish stance by the Federal Reserve. The FOMC meeting that concluded on Wednesday indicated a gradual pace of rate hikes. Following the Fed statement the dollar had dropped to its lowest level against the euro in eight days on Wednesday.
Stronger dollar had a negative impact on oil prices, which in turn adversely affected energy shares. The prices of WTI crude oil and Brent crude oil decreased 1.6% and 2.7% to $43.96 per barrel and $54.43 a barrel, respectively. The Energy Select Sector SPDR (XLE) declined 1.6%, the second highest among the S&P 500 sectors.
Dow components Exxon Mobil Corporation (XOM – Analyst Report) and Chevron Corporation (CVX – Analyst Report) decreased 1.9% and 1.8%, respectively. Other energy stocks such as EOG Resources, Inc. (EOG – Analyst Report), Kinder Morgan, Inc. (KMI – Analyst Report) and Chesapeake Energy Corporation (CHK – Analyst Report) declined 1.3%, 0.1% and 4.5%, respectively. Separately, shares of Transocean Ltd. (RIG – Analyst Report) plunged almost 7.2% after the offshore driller forecasted a non-cash charge of about $300–$325 million in its first quarter as it plans to scrap four rigs. The offshore driller was the S&P 500’s biggest decliner.
Dollar’s strength also weighed on materials sector. The Materials Select Sector SPDR ETF (XLB) declined 1.7%, the highest among the S&P 500 sectors. Key stocks from the sector including E. I. du Pont de Nemours and Company (DD – Analyst Report), Monsanto Company (MON – Analyst Report), The Dow Chemical Company (DOW – Analyst Report), Praxair Inc. (PX – Analyst Report) and LyondellBasell Industries N.V. (LYB – Analyst Report) decreased 1.9%, 1.5%, 1.7%, 2.2% and 2.1%, respectively. Separately, Nucor Corporation’s (NUE – Analyst Report) guidance for first quarter earnings came below analysts’ expectations. Nucor saw its shares drop 6.4%. The steel giant turned out to be the S&P 500’s second biggest decliner.
Meanwhile, the Nasdaq settled in positive territory boosted by gains among bio-tech stocks. Bio-tech stocks including Biogen Idec Inc. (BIIB), Celgene Corporation (CELG), Vertex Pharmaceuticals Incorporated (VRTX) and Regeneron Pharmaceuticals, Inc. (REGN) and Amgen Inc. (AMGN) increased 1.3%, 2.2%, 3.4%, 2.9% and 1.5%, respectively. Overall, the iShares NASDAQ Biotechnology Index gained almost 2%.
Facebook, Inc.’s (FB) gains also boosted the Nasdaq. The social networking company is set to introduce a money-sending function on its messenger application. Facebook’s shares gained more than 2% on Thursday. Unlike Facebook, tech behemoth Apple Inc. (AAPL) saw its shares end in the red. The iPhone makers’ shares dropped 0.8% on a day it officially became a member of the Dow, replacing AT&T, Inc. (T). Shares of AT&T also fell 1.2%.
In earnings news, shares of Lennar Corp. (LEN) declined 0.1% despite the homebuilder reporting first-quarter 2015 adjusted earnings of 50 cents per share that beat the Zacks Consensus Estimate of 45 cents. On the other hand, shares of Guess’ Inc. (GES) jumped 16% after the company posted fourth-quarter earnings per share of 63 cents, more than the Zacks Consensus Estimate of 58 cents. However, revenues of $696.7 million missed the Zacks Consensus Estimate of $702 million.
On the economic front, the U.S Department of Labor reported that seasonally adjusted initial claims increased 1,000 to 291,000 in the week ending Mar 14. This was in line with the consensus estimate.
Additionally, the Philadelphia Federal Reserve’s manufacturing index dropped to 5.0 in March from 5.2 in February. The consensus estimate expected the index to climb to 7.6. Separately, the Conference Board’s leading economic index increased 0.2% in February, less than the consensus estimate of a 0.3% increase.