Market Snapshot: Stock market under pressure as investors lose some appetite for risk
U.S. stocks fell on Wednesday as falling oil prices and worries over the progress of a U.S. tax overhaul left investors increasingly averse to putting more money into assets perceived as risky, including equities.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, -0.57% fell as much as 160 points, though it last traded down 87 points, or 0.4%, at 23,318 with nearly all blue-chip companies trading in negative territory.
The S&P 500 index SPX, -0.49% was down 9 points, or 0.4%, to 2,569, with nine of the 11 main sectors trading lower. Energy shares were the biggest losers on the S&P 500, falling 0.9% following the drop in oil prices. Both the Dow and the S&P are on track for their fourth decline of the past five sessions.
The Nasdaq Composite COMP, -0.42% declined 22 points, or 0.3% to reach 6,715.
Modest selling come after U.S. stocks finished slightly lower on Tuesday.
What could drive markets?
A slide in oil prices again weighed on investor appetite for riskier assets. West Texas Intermediate crude CLZ7, -0.81% fell 0.7%, to $ 55.19 a barrel after the American Petroleum Institute late Tuesday reported a surprising buildup in U.S. inventories of both crude oil and gasoline.
Data from the U.S. Energy Information Administration Wednesday showed that domestic crude supplies rose by 1.9 million barrels for the week ended Nov. 10. That was contrary to the forecast for a decline of 1 million barrels from analysts surveyed by S&P Global Platts.
Crude prices were already under pressure Tuesday, with both WTI and Brent settling at their lowest levels since Nov. 3. The move lower came after the International Energy Agency cut its global crude-demand forecasts and warned of a boom for U.S. shale-oil production.
Thomas Kee: To make money in oil, listen to prices more than news
Meanwhile, concerns over the progress of tax-cut legislation in Washington were lingering on Wednesday. The Senate Finance Committee unveiled major changes to its tax legislation late Tuesday, including a repeal of the Obamacare individual mandate. That was pressuring stocks and the U.S. dollar.
U.S. President Donald Trump has said he would make a “major statement” now that he is back in Washington from his trip to Asia. At the start of the week, he said an announcement on trade and a wrap-up from his meetings on the trip would come Wednesday, but has since said, “Time and date to be set” in a post to Twitter.
Read: Here’s what happens if Obamacare mandate is repealed, as Senate is considering
What are strategists saying?
• “Now that the earnings season is wrapped up, markets are more beholden to macro data. Weakness in oil prices and skepticism about the passing of the tax bill are also weighing on sentiment,” said Karyn Cavanaugh, senior market strategist at Voya Financial.
Despite the drop on the day, major indexes remain within 1.5 percentage points of record levels.
“Any pullback at this stage should be viewed as an opportunity to buy, however. Earnings outlook for U.S. stocks, especially with the synchronized global growth environment is still good,” Cavanaugh said.
• “There have been a flurry of events that taken separately would not impact stocks but in combination are causing this weakness. While this is not a reflection of a sustained downward move, a little pullback is possible given uncertainty about the tax plan and also the Fed policy, which right now differs from market expectation,” said Shannon Saccocia, chief investment strategist at Boston Private.
What economic data are coming?
Retail sales slowed in October, rising only 0.2%, after a sharp gain in the prior month.
The consumer-price index rose 0.1% in October, held down by falling energy prices. This was in line with forecasts.
See: Why the yield curve may invert even if inflation picks up
Speaking in London early Wednesday, Chicago Fed President Charles Evans said inflation has been too low for too long and the U.S. central bank has to alter its communications with the markets to convince investors the central bank is willing to let it run hotter than the 2% target.
Boston Fed President Eric Rosengren will give a speech at Northeastern University’s economic policy forum in Boston at 4:10 p.m. Eastern.
Check out: MarketWatch’s Economic Calendar
Which stocks look like key movers?
Shares of Boeing Co. BA, +0.59% rose 0.6% after the aircraft maker announced a deal to sell Dubai-based Flydubai up to 225 more of its 737 Max 8 planes at a list price value of $ 27 billion. Meanwhile, rival Airbus SE secured one of the largest aircraft deals in history with a 43-jet, $ 49.5 billion order.
Target Corp. TGT, -8.42% dropped 8.5% after the retailer’s fiscal third-quarter profit and sales beat expectations, but the company offered a downbeat profit outlook for the current quarter and said it expected a “highly competitive” environment for holiday sales.
Cisco Systems Inc. CSCO, +0.29% is due to report after the close.
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Shares of SendGrid Inc. SEND, +13.81% spiked nearly 13% in its trading debut. The email-marketing company priced its initial public offering higher than expected and will offer more shares than originally planned.
General Electric Co. GE, +1.54% rose 2.3% in a partial rebound from recent weakness. The Dow component has tumbled more than 10% this week alone—it is off 42% year to date—with heavy selling after it cut its dividend.
Among the most actively traded energy stocks, Exxon Mobil Corp. XOM, -1.08% fell 1% while Halliburton Co. HAL, -2.98% was off 2.9%.
What are other assets doing?
West Texas Intermediate crude CLZ7, -0.81% fell 30 cents, or 0.6%, to $ 55.40 a barrel, while Brent crude LCOJ8, -0.50% dropped 30 cents, or 0.5%, to $ 61.93 a barrel.
European stocks SXXP, -0.49% were headed toward a 7th-straight loss as falling oil prices drove major energy names lower. Asian markets ADOW, -1.23% closed sharply lower across the board, also weighed by falling commodity prices. Gold futures GCZ7, -0.43% reversed earlier gains and were $ 4.80 lower to $ 1,278.10 an ounce.
The ICE Dollar Index DXY, -0.04% pared earlier losses to trade flat at 93.844.