Energy, Materials Shares Yank Wall Street Lower
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Energy and materials stocks sustained heavy losses on the back of a selloff across certain futures markets, dragging the broader markets solidly into the red.
As of 3:10 p.m. ET, the Dow Jones Industrial Average fell 81.3 points, or 0.61%, to 13187, the S&P 500 dipped 12.2 points, or 0.87%, to 1390 and the Nasdaq Composite slipped 40.2 points, or 1.3%, to 3019.
Crude oil prices traded in New York tumbled $2.62, or 2.5%, to $102.58 a barrel in afternoon trading. Meanwhile, gold was off $20.10, or 1.2%, to $1,633 a troy ounce and silver and copper fell by roughly the same margin on a percent basis.
Integrated energy companies like Chevron (NYSE:CVX), along with oil-field servicing companies, like Schlumberger (NYSE:SLB) fell sharply on Thursday as a result. Materials names like Freeport-McMoRan Copper & Gold (NYSE:FCX) were under heavy selling pressure as well.
The state of the world's biggest economies has taken the spotlight this week, with key data points released from the U.S., Europe and China. On the U.S. front, the reports have pointed to expansion across the manufacturing and labor markets, although the pace of gains has been called into question recently.
The weekly jobless claims report and a read on the services sector will shed some more light on the world's biggest economy with the highly anticipated monthly employment report looming just a day away.
The Labor Department said 365,000 people filed for first-time unemployment benefits last week, from 392,000 the week prior in the biggest drop since May 2011. Economists were expecting a drop to 380,000 from an initially reported 388,000. A separate report from consultants at Challenger, Gray & Christmas showed planned layoffs at U.S. companies climbed to 40,559 in April from 37,880 the month prior. The cuts were led by the education sector.
The U.S. services sector expanded at a slower pace in April than the month before, according to a report by the Institute for Supply Management. The ISM non-manufacturing gauge clocked in at 53.5 for the month from 56 the month before, weaker than the 55.5 economists forecast.
"Over time ... we expect the recent concerns about US growth to dissipate while euro area problems are not likely to go away quickly," Paul Robinson, an analyst at Barclays Capital, wrote in a note to clients.
Indeed, the situation in Europe has been less optimistic. The manufacturing sector in the eurozone is shrinking at an increasing gate, according to data released on Wednesday. Spain held its first bond auction since Standard & Poor's cut its debt rating by two notches last week. The country saw strong demand for its three-year and five-year bonds, but at the price of sharply higher yields. Analysts worry that Spain may struggle to cut its deficit and service its debts if its borrowing costs continue rising.
The European Central Bank said Thursday it is keeping its main refinancing rate unchanged at a record low of 1% as expected. The central bank is looking to keep the eurozone's struggling economy afloat, while also keeping inflation in check.
On the corporate front, many big-name retailers report their monthly sales on the day. Macy's (NYSE:M) saw its same-store sales rise 1.2% last month, weaker than the 1.9% that was expected. Target (NYSE:TGT) missed as well, posting an increase of 1.1%, compared to the forecast of 2.8%.
General Motors (NYSE:GM) posted first-quarter results that topped Wall Street's expectations on the top and bottom lines. Carlyle Group (NASDAQ:CG) made its public debut on the Nasdaq Stock Market, rising roughly 1%.
European blue chips fell 0.14%, the English FTSE 100 gained 0.15% to 5767 and the German DAX dipped 0.24% to 6694.
In Asia, the Japanese Nikkei 225 climbed 0.31% to 9380 and the Chinese Hang Seng slipped 0.28% to 21249.