Chevron drags on blue chips as oil prices fall
Stocks closed near session lows Tuesday as the Dow industrials and S&P 500 finished lower and the tech-heavy Nasdaq carved out a new record while investors sifted through mostly upbeat earnings reports against a backdrop of falling oil prices and remarks from Federal Reserve speakers.
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The S&P 500 index closed down 2.46 points, or 0.1%, at 2,396.92 with seven of the 11 main sectors finishing lower, as utilities, energy and materials stocks led decliners, offsetting gains in the consumer discretionary and industrial sectors. The benchmark index set a fresh intraday record of 2,403.84 shortly after the open.
The Nasdaq Composite Index rose 17.93 points, or 0.3%, to close at a record 6,120.59, its 30th closing record of the year, off its intraday record of 6,133.00.
The Dow Jones Industrial Average finished down 36.50 points, or 0.2%, at 20,975.78, about 140 points below its record close from early March. Shares of Chevron Corp.(CVX) and Cisco Systems Inc.(CSCO) were the largest decliners on the average.
Analysts said the market needed a catalyst to break out of rangebound trading, albeit at lofty valuation levels.
"The bull market is still intact and in the absence of negative news we may see prices drift higher," said Randy Frederick, managing director of trading and derivatives at Schwab Center for Financial Research.
Frederick warned that stretched valuations are an impediment for further big gains, however.
"If we don't see promised tax cuts by the end of the year, investors may lose patience, even though fundamentals remain solid," Frederick said.
Retail and other consumer-focused earnings are particularly important this week because of gnawing investor concerns that consumers are reluctant to open their wallets, said Quincy Krosby, chief market strategist at Prudential Financial.
"This is a market that needs an unequivocal solid package of economic data to move higher," Krosby said in an interview, adding that as markets drift higher, investors are more likely to pull back in search for the next big positive catalyst.
This week's listless trading sessions follow the widely expected victory Sunday by independent centrist Emmanuel Macron in the French presidential election, an outcome that investors appeared to have largely factored in over the previous two weeks.
Read:Here's why the Macron-inspired rally for global markets is fizzling (http://www.marketwatch.com/story/heres-why-the-macron-inspired-rally-for-global-markets-is-fizzling-2017-05-08-910308)
"With [the French election] hurdle cleared, investors have already turned their attention to a roster of risk events over the next six weeks, including U.K. and French [parliamentary] elections, major central bank updates and an OPEC meeting," analysts at Accendo Markets said in a note.
Macron easily defeated far-right nationalist Marine Le Pen, seen as a removal of potential geopolitical turmoil in Europe. That helped send the CBOE Volatility Index to its lowest level since 1993 (http://www.marketwatch.com/story/wall-streets-fear-gauge-just-hit-its-lowest-level-in-24-years-2017-05-08), "suggesting low anxiety among investors who are merely awaiting the next catalyst to extend the long-term uptrend," according to the Accendo analysts.
Oil prices settled down 1.2% at $45.88 a barrel ahead of a decision (http://www.marketwatch.com/story/oil-prices-rise-modestly-but-analysts-say-market-is-fragile-2017-05-09) to extend output cuts when OPEC meets later in May. The yield on a 10-year Treasury note was up nearly 2 basis points to 2.403%.
Read:How oil is setting up for a supply squeeze -- and that's good news for bulls (http://www.marketwatch.com/story/the-bullish-case-for-oil-in-2017-and-beyond-2017-05-08)
Economic news: A reading of job openings in March was cut from February, while a report on wholesale inventories showed a gain of 0.2% in March.
In other economic data, small-business sentiment fell (http://www.marketwatch.com/story/small-business-mood-falls-as-congress-initially-disappointed-on-health-care-tax-reform-lagged-2017-05-09) for the third straight month in April to a reading of 104.5.
The Federal Reserve meeting in June is one of the events traders are waiting for to potentially steer the market higher. According to the CME's FedWatch tool (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html), markets are pricing in an 88% chance of a rate increase at the U.S. central bank's June 14 meeting.
On Tuesday, several Fed speakers will be closely watched for any hints about the coming policy decision.
Minneapolis Fed President Neel Kashkari said at the Minnesota High Tech Spring Conference on Tuesday that the blockchain technology that serves as the basis for cryptocurrencies like has more potential than bitcoin itself.
Kansas City Fed President Esther George said the central bank should still stick to gradually raising rates (http://www.marketwatch.com/story/feds-george-says-rate-hikes-should-continue-despite-some-economic-indicators-flashing-yellow-2017-05-09) although some economic indicators like car sales were flashing "yellow," while Boston Fed President Eric Rosengren voiced concern over high commercial real-estate prices (http://www.marketwatch.com/story/feds-rosengren-warns-that-fannie-freddie-reform-could-roil-commercial-real-estate-market-2017-05-09).
Dallas Fed President Rob Kaplan will appear in a moderated discussion at the Dallas Regional Chamber in Dallas at 4:15 p.m. Eastern.
Earnings season:Office Depot Inc.(ODP) shares finished up 2.9% after the retailer beat earnings expectations.
Allergan PLC (AGN) shares slipped 1.4% even as the company topped earnings estimates on strength of Botox, eye care products.
Valeant Pharmaceuticals International Inc.(VRX.T) shares soared 24% after the drugmaker beat first-quarter profit expectations, although revenue came up shy.
Discovery Communications Inc.(DISCK) shares fell 2.2% following first-quarter earnings that came in below expectations as subscribers cut the cord.
Pandora Media Inc.(P) shares pared heavy losses, finishing down 4.4% following a report that the company is confident of a deal to sell itself within 30 days.
Airline shares rallied after American Airlines Group Inc.(AAL) reported record traffic for April (http://www.marketwatch.com/story/american-airlines-record-april-traffic-sparks-stock-rally-2017-05-09). American shares surged 4.8%, while shares of United Continental Holdings Inc. (UAL) also jumped 4.8% and Delta Air Lines Inc.(DAL) shares rose 2.1%.
Shares of Marriott International Inc.(MAR) gained 6.4% after the hotel operator's quarterly earnings released late Monday topped Wall Street estimates (http://www.marketwatch.com/story/marriott-shares-rise-after-earnings-top-street-view-2017-05-08).
Other markets: Stocks in Asia closed mixed, with Japan's Nikkei 225 index down 0.3%, while Hong Kong's Hang Seng Index rallied 1.3%.
Stock markets in Europe finished lower, adding to Monday's losses (http://www.marketwatch.com/story/european-stocks-pull-back-from-21-month-high-after-macron-wins-french-election-2017-05-08).
Read:Why 'this is the end of the European rally' in stocks, says Saxo Bank (http://www.marketwatch.com/story/this-is-the-end-of-the-european-rally-as-macrons-path-italy-pose-challenges-saxo-2017-05-08)
The dollar traded 0.5% higher against most major currencies, adding pressure on gold prices (http://www.marketwatch.com/story/gold-trades-modestly-lower-as-dollar-firms-2017-05-09), which settled down 0.9% at $1,216.10 an ounce.
--Sara Sjolin in London contributed to this report
(END) Dow Jones Newswires
May 09, 2017 16:29 ET (20:29 GMT)