Slide in Energy Shares Caps Gains in U.S. Stocks

By Jon Sindreu and Aaron Kuriloff Features Dow Jones Newswires

Declines in energy stocks pressured major U.S. indexes Wednesday, while financial shares gained.

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The Dow Jones Industrial Average rose 5 points, or less than 0.1%, to 21141. The S&P 500 added less than 0.1% and the Nasdaq Composite gained 0.3%.

Shares of energy companies in the S&P 500 fell 1.6% as the price of oil slumped. U.S. crude lost 4.2% to $46.17 a barrel after the U.S. Energy Information Administration reported that oil stockpiles rose for the first time in nine weeks. Gasoline inventories also rose, raising fears U.S. drivers won't use up the glut of crude and fuel over the summer.

Financial stocks rose 0.7%. Goldman Sachs added 0.8% and J.P. Morgan Chase rose 0.9%.

Stocks had slipped in recent sessions as investors waited for a series of scheduled events that have the potential to create big moves in global markets. Along with a policy decision from the European Central Bank Thursday, former U.S. Federal Bureau of Investigation director James Comey is expected to testify in Washington. Early results for the U.K. general election will start coming in that day, with the latest polls suggesting a tighter race than originally anticipated.

Some analysts and investors said signs of improvement in the global economy and corporate earnings will likely limit the impact of politics on markets in coming sessions.

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"As long as earnings are strong and the economic backdrop good, I'm still cautiously optimistic," said Susan Bao, portfolio manager at J.P. Morgan Asset Management.

The Stoxx Europe 600 rose 0.1%, boosted by rising bank shares, after media reports that the ECB will lower its inflation forecast for 2019. This was a signal for investors that officials will strike a dovish tone in their long-awaited policy decision Thursday, with anticipation of continued central bank support typically pressuring the euro while pushing investors into riskier investments like stocks.

The euro fell 0.2% against the U.S. dollar. European banks gained 1.1%. Banco Santander shares lost 0.6% after it announced the takeover of Spanish rival Banco Popular Español, which the ECB had deemed "likely to fail" earlier Wednesday.

Many analysts now believe recent increases in inflation are mostly the result of higher oil prices, rather than stronger consumer demand, and such effects could start to fade soon. Last week, official figures showed eurozone inflation falling to 1.4% in May, after coming close to the ECB's target of close but below 2% for several months.

Investors had long marked June's ECB meeting in their calendars as the date when officials could hint at the possibility of tighter monetary policy, so the prospect of ECB President Mario Draghi delivering a dovish speech is a boost for stocks, bonds and the single currency.

He "would have to be very outspoken, vehemently rejecting a change of the forward guidance for the market to lower the market's rate expectations and for the euro's upside momentum to be slowed," said Antje Praefcke, analyst at German lender Commerzbank.

In Asia, the Japanese Nikkei Stock Average and Australia's S&P/ASX 200 both little changed, while Korea's Kospi lost 0.4%. The Shanghai Composite Index added 1.2%.

Write to Jon Sindreu at jon.sindreu@wsj.com and Aaron Kuriloff at aaron.kuriloff@wsj.com

(END) Dow Jones Newswires

June 07, 2017 12:02 ET (16:02 GMT)