Drop in Commodities Damps U.S. Stocks

By Akane Otani and Riva Gold Features Dow Jones Newswires

U.S. stock indexes wavered Thursday, pressured by a steep drop in commodity prices.

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The Dow Jones Industrial Average fell 29 points, or 0.14%, to 20951. The S&P 500 was flat, and the Nasdaq Composite down 0.06%.

Major stock indexes have climbed the past few weeks as quarterly earnings results have pointed to health among U.S. corporations. The U.S. posted the biggest improvement in its revision ratio -- which measures the ratio of upward and downward earnings estimates by analysts -- of all regions in April, according to Bank of America Merrill Lynch.

Solid earnings could help stocks keep advancing, investors and analysts say, even as some have expressed concerns about recent weakness in inflation, consumer spending and economic growth.

"The earnings story is still very robust, and that's why investors have been able to look through some of the softer economic data," said Jason Draho, head of tactical asset allocation Americas at UBS Wealth Management.

Commodity prices slid across the board on Thursday, putting pressure on shares of energy companies. U.S. crude oil fell 2.6% to $46.57 a barrel, deepening its losses for the year. Energy shares in the S&P 500 fell 1.6%, with Dow component Chevron falling 1.5%.

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Financial shares in the S&P 500 rose with yields, giving major indexes a boost. American International Group, which reported Wednesday afternoon that it swung to a profit in the latest quarter, jumped 2.7%, while Wells Fargo added 1.3%.

Government bonds slipped Thursday, with the yield on the 10-year U.S. Treasury note rising to 2.365%, according to Tradeweb, from 2.309% on Wednesday. Yields rise as bond prices fall.

Elsewhere, the Stoxx Europe 600 rose 0.4% after a measure of activity in the eurozone's manufacturing and services sectors rose to a six-year high and retail-sales figures improved.

"For the first time since the European sovereign-debt crisis broke out, we have a synchronized economic upswing in almost all continental European economies," said Frank Engels, head of multiasset portfolios at Union Investment.

Earlier, a global decline in metals prices gained speed in Asian trading Thursday amid concerns about Chinese demand for commodities such as steel and iron. China's iron-ore futures opened at the 8% limit drop, while copper futures fell 1.9% and gold slid 1.3%.

A measure of service-sector activity in China hit its lowest level in nearly a year for April on Thursday, adding to concerns about the country's economic health, though it remained in expansion territory.

"China has been gradually but appreciably tightening credit," said Tina Byles Williams, chief investment officer and chief executive at FIS Group, noting that is slowly showing up in economic data and metal prices.

"I don't see catastrophe, but I do think there's a lot of complacency in emerging-market assets around China," she said.

The Shanghai Composite Index fell 0.3%, ending lower for a third straight session. South Korean equities powered to record highs, adding 1% Thursday as index heavyweight Samsung advanced. Japan's markets were closed for a holiday.

Write to Akane Otani at akane.otani@wsj.com and Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

May 04, 2017 11:19 ET (15:19 GMT)