MARKET SNAPSHOT: U.S. Stocks Flat As Facebook, Crude Oil Slump Offset Fed Optimism
Facebook, Tesla fall sharply, offsetting Fed optimism
U.S. stocks were flat on Thursday, as major technology companies sold off in the wake of their results and the energy sector tumbled alongside a drop in crude oil, overshadowing a statement from the Federal Reserve that signaled confidence in the economy.
Major indexes opened higher but quickly turned lower as crude oil weighted. However, they subsequently recovered from that mild weakness to trade flat, a sign of how investors continue to search for direction and catalysts to drive longer-term action.
The Dow Jones Industrial Average fell 15 points, or less than 0.1%, to 20,943, while the S&P 500 rose 2 points to 2,390, a gain of less than 0.1%. The Nasdaq Composite Index was up 6 points to 6,079, off less than 0.1%.
Facebook Inc.(FB), one of the largest U.S. companies by market capitalization, fell 0.5% despite posting better-than-expected (http://www.marketwatch.com/story/facebook-shares-rise-after-first-quarter-revenue-beat-2017-05-03) earnings and revenue late Wednesday. The drop was seen as related to the stock's recent outperformance; it is up nearly 30% thus far this year.
"Valuations are lofty, but companies are mostly delivering what people had been expecting, and those [analyst] estimates were pretty high to begin with. That is why we continue to muddle around these high levels in the market," said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group.
Energy shares weighed on the broader market, with the sector (XLE) down 1.7%, tumbling alongside a 3.2% drop in crude oil , which took prices to their lowest level since November (http://www.marketwatch.com/story/oil-prices-sink-to-lowest-levels-since-november-2017-05-04).
Crude sank on expectations for a recovery in Libyan production, along with rising U.S. output, both of which would add to the market's persistently high levels of supply. Among the most active names, Chevron Corp. (CVX) fell 1.4%, ConocoPhillips(COP) lost 2.2% and Occidental Petroleum Corp. (OXY) shed 2.7%.
"Oil has been in correction mode, which is weighing on the market. Futures had been higher because of positive sentiment here and in Europe, but the energy weakness changed that," Sosnick said.
The Fed statement, released on Wednesday two hours before the market's close, said the central bank's policy panel "views the slowing in growth during the first quarter as likely to be transitory," deploying unusually dismissive language (http://www.marketwatch.com/story/fed-holds-interest-rates-steady-dismisses-first-quarter-slump-as-transitory-2017-05-03). The Fed also left interest rates unchanged, as had been widely expected.
Equities had also been supported by an apparent easing of geopolitical tensions abroad, with European stocks higher after markets-friendly French presidential candidate Emmanuel Macron (http://www.marketwatch.com/story/emmanuel-macron-5-things-to-know-about-the-man-poised-to-be-frances-president-2017-04-24) weathered a televised debate Wednesday night and appeared to remain on track to win in Sunday's runoff election against euroskeptic Marine Le Pen.
See:Brace for market mayhem if Le Pen unexpectedly wins French presidency (http://www.marketwatch.com/story/brace-for-market-mayhem-if-le-pen-unexpectedly-wins-french-presidency-2017-05-04)
Europe's main stock benchmark was on track to close near its highest level since August 2015 (http://www.marketwatch.com/story/european-stocks-flirt-with-almost-21-month-high-after-earnings-deluge-2017-05-04), getting a lift from well-received earnings and Macron's debate performance (http://www.marketwatch.com/story/macron-le-pen-square-off-in-debate-ahead-of-sundays-french-election-2017-05-03).
Economic news: In the latest economic data, first-time jobless claims fell sharply in the latest week (http://www.marketwatch.com/story/us-jobless-claims-fall-sharply-in-latest-week-2017-05-04), dropping a larger-than-expected 19,000 in the latest sign of strength in the labor market. Separately, U.S. productivity fell 0.6% in the first quarter (http://www.marketwatch.com/story/us-productivity-slumps-in-first-quarter-2017-05-04); analysts had forecast no change.
Check out:
There are no Fed officials scheduled to speak today.
Individual movers:Tesla Inc.(TSLA) lost 6% after the maker of electric cars late Wednesday revealed a wider-than-expected adjusted loss (http://www.marketwatch.com/story/tesla-shares-higher-after-wider-loss-revenue-beat-2017-05-03), though its quarterly revenue beat forecasts.
Read: Elon Musk says robot software will make Tesla worth as much as Apple (http://www.marketwatch.com/story/elon-musk-robot-software-will-make-tesla-worth-as-much-as-apple-2017-05-04)
Dunkin' Brands Group Inc.(DNKN) rose 0.4% after the doughnuts seller posted (http://www.marketwatch.com/story/dunkin-brands-falls-15-premarket-after-revenue-miss-2017-05-04) a larger-than-expected rise in adjusted profit, but weaker-than-anticipated revenue.
Avon Products Inc.(AVP) reported a surprise loss (http://www.marketwatch.com/story/avon-products-reports-surprise-loss-while-sales-rise-as-expected-2017-05-04), sending shares down 17%.
Other markets:Gold futures (http://www.marketwatch.com/story/gold-tumbles-1-after-fed-signals-confidence-in-the-us-economy-2017-05-04) tumbled 1.6% and were on pace for their lowest settlement since mid-March.
See:Why now may be a good time to buy gold and silver (http://www.marketwatch.com/story/why-now-may-be-a-good-time-to-buy-gold-and-silver-2017-05-03)
And read:Gold investment demand falls 34%, but WGC says it was still 'robust' (http://www.marketwatch.com/story/gold-investment-demand-falls-34-but-wgc-says-it-was-still-robust-2017-05-04)
Asian markets finished mostly with losses, though Korea's benchmark scored a record close (http://www.marketwatch.com/story/record-high-for-korean-stocks-as-other-asian-markets-slip-2017-05-03). A key dollar index edged down 0.2%.
(END) Dow Jones Newswires
May 04, 2017 11:47 ET (15:47 GMT)