U.S. Stocks Open Slightly Higher as Oil Stabilizes
U.S. stocks opened slightly higher Wednesday amid a stabilization in oil prices, while Chinese shares got a modest boost after MSCI Inc. said it would add the country to its emerging-markets index.
The Dow Jones Industrial Average added 2.7 points, or less than 0.1%, to 21470 shortly after the opening bell. The S&P 500 gained 0.1%, and the Nasdaq Composite rose 0.2%.
The S&P 500 and Dow Jones Industrial Average posted their biggest daily losses in more than a month Tuesday as oil prices dropped to their lowest level since September, dragging down shares of oil companies.
U.S. crude oil futures added 0.1% to $43.54 a barrel, reversing the morning's declines after returning to bear-market territory Tuesday.
"There's so much shale oil in the U.S. and so much excess supply," said Patrick Spencer, vice chairman of equities at Robert W. Baird & Co.
U.S. oil production has climbed about 7% since OPEC unveiled plans to cut output in November, keeping prices subdued.
Still, Mr. Spencer expects the wider U.S. stock market to continue to grind higher this year, supported by strong earnings, even if oil wobbles. "Positive earnings revisions and a weaker dollar are quite a powerful springboard for the U.S.," he said.
Elsewhere, the Stoxx Europe 600 slipped 0.2% but moved off its worst levels of the day when falling oil prices had added to doubts about inflation and sent government bond yields lower. Banks and insurance companies were the worst performers in Europe, while shares of Provident Financial declined 18% after a profit warning.
Yields on 10-year U.S. Treasury rose to 2.171% Wednesday from 2.153% Tuesday, after dropping earlier in the morning. Yields move inversely to prices.
"Oil, which can be a big inflation contributor, is down around 20% year to date," said Nancy Curtin, chief investment officer at Close Brothers Asset Management. "Despite improvements in the growth picture, there seems to be very little inflation," she said.
Federal Reserve Bank of Dallas President Robert Kaplan also said Tuesday that he would like to see more evidence of inflation before raising interest rates again.
"I'd like to see now a confirmation in the data that the recent weakness in March, and to some extent April and May, was transitory," he said.
Earlier, stocks were lower across the Asia-Pacific region amid losses in energy companies and banks. The Nikkei Stock Average dropped 0.5% as the yen strengthened, while Hong Kong's Hang Seng Index fell 0.6%. Australia's S&P ASX 200 logged its biggest decline of the year, falling 1.6%.
Mainland China markets inched higher, however, after MSCI Inc. said it would include China A-shares in its emerging-markets index, meaning funds that track it will automatically allocate money into China. The Shanghai Composite Index added 0.5% and stocks in Shenzhen gained 0.4% as positive sentiment from the MSCI decision narrowly offset outflows from the energy sector.
"We think today's MSCI move will help to accelerate China's financial integration into the rest of the world," Aidan Yao, economist at AXA Investment Managers, said in a note.
"For global investors, while the inclusion will not trigger an immediate and wholesale change in their asset allocation, it will put Chinese equities on the map."
In currencies, the WSJ Dollar Index edged down 0.1% after two days of gains, while the British pound rose 0.6% to $1.2703 after the Bank of England's chief economist Andrew Haldane said he was in favor of removing some of the stimulus provided in the wake of the Brexit vote later this year.
--Ese Erheriene, Stephanie Yang and Alejandro Lazo contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
June 21, 2017 09:53 ET (13:53 GMT)