U.S. stocks were little changed Friday, as energy companies in the S&P 500 were on track to post their biggest weekly fall since February 2016.
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The price of oil tumbled during the week, pressuring shares of energy companies and equipment makers as lower oil prices can hurt their profit margins. Many investors expected the price of oil had stabilized in recent months, and bought energy shares on expectations of a return to earnings growth. The sharp fall in U.S.-traded crude oil this week calls that investment thesis into question.
U.S.-traded crude oil slipped 0.2% at $42.65 a barrel, on track to end the week more than 4% lower and off roughly 12% from the start of the month. Oil prices have been a drag on stock markets this week, with the S&P 500 energy sector down 3.3%, its worst weekly performance since the week ended Feb. 5, 2016.
On Friday, energy stocks bounced back slightly, up 0.3%. The broader S&P 500 index lost less than 0.1%, while the Nasdaq Composite slipped 0.1%. The Dow Jones Industrial Average fell 40 points, or 0.2%, to 21357.
Bank shares were a touch higher after the Federal Reserve said the largest banks survived a hypothetical "stress test," suggesting some could win the Fed's approval to increase dividend payouts to investors next week.
Shares of pharmaceutical companies and biotech firms were on track to post their best week since after the November election after Senate Republicans unveiled their plans to overhaul the Affordable Care Act. In the past year, biotech stocks suffered as some investors feared increased scrutiny of drug pricing. Recently, however, investors scooped up biotech stocks as the administration has steered clear of rolling out such rules.
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The S&P 500 health-care sector is on track to end the week up 3.4%, its biggest gain since the week ending Nov. 11, while the Nasdaq Biotechnology Index is up 8.3% so far this week. On Friday, health-care and biotech stocks ticked lower.
In corporate news, shares of Bed Bath & Beyond fell 12% after its earnings missed expectations.
Global stocks found little traction Friday, while the British pound inched up on the first anniversary of the U.K.'s vote to leave the European Union.
The Stoxx Europe 600 slipped 0.4% amid losses in autos and food and beverage companies, while London's export-heavy FTSE 100 declined 0.2% as the pound climbed 0.2% to $1.2708, paring the week's declines.
Since the June 23, 2016, U.K. referendum in 2016, the FTSE 100 index, which generates roughly two-thirds of its revenue overseas, has climbed about 17%, while the pound has fallen roughly 15%. The pound now looks cheap compared with historical levels, but U.K. interest-rate expectations have fallen significantly since the vote, with growth expected to slow this year, keeping the currency under pressure.
"We don't see a recession on the horizon," said Ed Smith, strategist at Rathbones. "But the only thing that has really driven the U.K. economy higher over the last two years has been the consumer and household spending, and we think that's going to suffer," he said, noting the sharp fall in the pound has precipitated a rise in inflation that has outpaced real wage growth.
Elsewhere in markets, yields on 10-year Treasury notes were little changed at 2.152% from 2.153% Thursday, while the WSJ Dollar Index edged down 0.2%.
Earlier, Shanghai stocks recovered to trade up 0.3% in a volatile session after increased regulatory scrutiny over the borrowings of China's most prolific overseas deal makers sent markets lower. The Shanghai Composite Index dropped as much as 0.9% following news that regulators had ordered banks to check their loans to major Chinese conglomerates.
The choppy moves could heighten apprehensions about volatility that bogged down Chinese markets for most of last year, just days after index compiler MSCI decided to include A-shares in its emerging markets indexes next year. A dominance of retail traders that move in and out of the world's second-biggest stock market has meant that trades often happen on rumor and sentiment.
--Shen Hong and Ryan Tracy contributed to this article.
Write to Riva Gold at firstname.lastname@example.org and Kenan Machado at email@example.com
(END) Dow Jones Newswires
June 23, 2017 10:20 ET (14:20 GMT)