Tensions in North Korea rattle markets
Technology stocks attempted to take flight Wednesday and avoid a four session drop, but a disappointing manufacturing report and a sudden tumble in crude futures weighed on Wall Street.
U.S. factory orders in May fell 0.8%, compared with an expected decline of 0.7% from a survey of economists polled by MarketWatch, and a 0.2% decline in the prior period.
The Dow Jones Industrial Average traded off 16 points, or less than 0.1%, at 21,463, but well off its lows of the session. A slide in shares of DuPont Inc.(DD), off 1.5%, and Exxon Mobil Corp.(XOM), down 1.5%, offset gains of more than 1% in Boeing Co. (BA) and Microsoft Corp. (MSFT).
The S&P 500 index was trading 2 points, or 0.1%, higher at 2,430, aided by 0.8% rally in technology shares, and firm gains in health care and financials.
The Nasdaq Composite Index which has been switching in and out of positive territory, was most recently up 28 points, or 0.5%, at 6,138, trading near session highs.
Quincy Krosby, chief market strategist at Prudential Financial, said investors are seeing opportunities to scoop up tech names at relatively discounted prices, given a recent slump that has taken the large-capitalization Nasdaq-100 index, and the tech-focused Technology Select Sector SPDR ETF(XLK) lower in the past three sessions, as Wall Street has fretted that the highflying sector has climbed too far, too fast.
"New money is coming into the [tech] market. The new money that you typically see at a new quarter and that provides perhaps more interesting valuations, or a discount to what they were selling for at the beginning of their run," Krosby said.
Still, Wednesday trade in tech and the broader market has been marked by swings in and out of positive territory.
"What we have been seeing is the market is fitful: Two steps forward and one step back," said Doug Cote, chief market strategist at Voya Investment Management. "But I would buy that all day long" he said, citing strong expected corporate earnings, particularly in the technology sector.
However, economic data has been mixed amid questions about the strength of the U.S.'s economic recovery as the Federal Reserve attempts to normalize interest-rate policy.
"The market is watching every morsel of economic data to see if inflation is moving in the direction that the Fed wants," Krosby said. She said investors will be focused on Friday's labor-market report after recent data have shown inflation slipping below the Fed's 2% target, despite growth in wages.
Cote discounted Wednesday's weak factory report because of its tendency to be volatile and pointed to growing signs that growth is picking up as evidenced by healthy economic reports abroad, which has led some global central bankers to talk of ending or abating easy-money policies that have persisted for nearly a decade.
On the energy front, a slump in crude futures capped the market's advance as oil prices took a sudden tumble on heightened doubts about the industry's ability to limit oil production. West Texas Intermediate oil shed $1.77, or 3.8%, to $45.30 a barrel, setting futures on track for their first loss in nine sessions
Meanwhile, investors also focused on geopolitical tensions escalating ahead of the Group of 20 summit (http://www.marketwatch.com/story/white-house-says-trump-putin-to-meet-at-g-20-summit-on-friday-2017-07-04) in Germany later this week. On Tuesday, North Korea successfully launched its first ballistic missile (http://www.marketwatch.com/story/north-korea-claims-successful-test-firing-of-an-icbm-2017-07-04) capable of reaching the continental U.S.
Read: Opinion: The oldest stock-market indicator sends a fresh 'buy' signal (http://www.marketwatch.com/story/the-oldest-stock-market-indicator-sends-a-fresh-buy-signal-2017-07-05)
Secretary of State Rex Tillerson said the U.S. "strongly condemns" North Korea for its action. The U.S. and South Korean armies on Wednesday conducted a joint exercise (http://www.marketwatch.com/story/us-calls-for-action-after-north-korea-successfully-launches-long-range-missile-2017-07-05), firing surface-to-surface missiles into the waters off South Korea.
Economic docket: At 2 p.m. Eastern, minutes from the Federal Reserve's June 13-14 meeting are due. Traders will be watching for any hint on when the central bank will start to shrink its balance sheet and raise interest rates again.
See:Central banks have set investors up for a long, hard road back to 'normal' (http://www.marketwatch.com/story/investors-face-a-long-hard-road-back-to-normal-2017-06-29)
The ADP private-payrolls data, seen as a precursor to the top-tier nonfarm jobs report, has been pushed back to Thursday because of the July 4 holiday. The figures are usually released Wednesday.
The ICE Dollar Index was up 0.1% to 96.330 ahead of the Fed minutes, rising for a fourth straight session, according to FactSet data.
Stocks to watch: Shares of Vantiv Inc. (VNTV) traded 2.3% lower, after being halted, as the company announced a deal to acquire rival payments processor Worldpay Group PLC(WPG.LN), after J.P. Morgan Chase & Co. (JPM) said it wasn't going to make a formal bid for the Worldpay (http://www.marketwatch.com/investing/stock/jpm).
Shares of Bristol-Myers Squibb Co.(BMY) rose less than 0.1% after the drugmaker reported positive results for a trial with its Opdivo drug for treatment of patients with melanoma.
Cara Therapeutics Inc. (CARA) slumped 8.5% after the biotech company, but the reasons for the decline weren't immediately clear.
Shares of Tesla Inc. (TSLA) tumbled into correction territory (http://www.marketwatch.com/story/teslas-stock-tumbles-into-correction-territory-but-analysts-sees-new-highs-ahead-2017-07-05), defined as of a drop of at least 10% from a recent peak, Wednesday, in the wake of downbeat deliveries data.
Energy companies were lower, tracking the sharp loss for oil prices after Russia ruled out any proposals to deepen production cuts led by the Organization of the Petroleum Exporting Countries. Shares of Chesapeake Energy Corp.(CHK) fell 6.9% and Transocean Ltd.(RIG) shares fell 3.8%.
Read:Oil to rally 20% before year's end--the case from a UBS analyst (http://www.marketwatch.com/story/ubs-analyst-is-looking-for-oil-to-rally-20-by-the-end-of-2017-2017-07-04)
Amazon.com Inc.(AMZN), Apple Inc.(AAPL), Microsoft Corp.(MSFT) eBay Inc.(EBAY) and Mattel Inc.(MAT) could be in focus on Wednesday. They were among the companies affected by a glitch Monday evening that showed their shares erroneously making major moves on popular finance sites (http://www.marketwatch.com/story/finance-sites-erroneously-show-amazon-apple-other-stocks-crashing-2017-07-03) such as Google Finance and Yahoo Finance.
Read:High-profile glitches aren't rare--here's how they keep rattling markets (http://www.marketwatch.com/story/high-profile-glitches-arent-rare-heres-how-they-keep-rattling-markets-2017-07-04)
Other markets: Stocks in Asia closed mainly higher (http://www.marketwatch.com/story/korean-stocks-hiccup-after-missile-test-as-other-asian-markets-gain-2017-07-03), while European markets were struggling for direction (http://www.marketwatch.com/story/european-stocks-struggle-to-rise-as-auto-makers-and-pharmas-drag-2017-07-05).
(END) Dow Jones Newswires
July 05, 2017 12:00 ET (16:00 GMT)