Plunging oil prices and energy companies hit stock indexes
NEW YORK — Oil prices plunged again Thursday and energy companies took sharp losses. While most U.S. stocks fell in afternoon trading, major indexes were little changed. Health insurers rose and hospitals declined as the House passed a bill intended to roll back much of former President Barack Obama’s health care law.
KEEPING SCORE: The Standard & Poor’s 500 index remained at 2,388 as of 2:30 p.m. Eastern time. The Dow Jones industrial average lost 18 points, or 0.1 percent, to 20,939. The Nasdaq composite was also stable at 6,072. The Russell 2000 index of small-company stocks dipped 4 points, or 0.3 percent, to 1,387. On the New York Stock Exchange, two out of every three stocks fell.
ENERGY: U.S. benchmark crude futures shed another $2.33, or 4.9 percent, to $45.49 a barrel in New York. Brent crude, the standard for international oils, fell $2.44, or 4.8 percent, to $48.35 a barrel in London. Oil was already trading at its lowest price since November as investors wonder if the OPEC cartel will extend an agreement to cut production and support prices. OPEC nations will discuss that deal later this month.
Exxon Mobil skidded $1.19, or 1.4 percent, to $81.51 and EOG Resources lost $3.18, or 3.5 percent, to $88.58. Chesapeake Energy tumbled 41 cents, or 7.3 percent, to $5.14.
THE QUOTE: Kate Warne, an investment strategist for Edward Jones, said oil prices have slipped recently because of an accumulation of concerns about rising energy production in the U.S. and slower economic growth in both the U.S. and China. High supply and lower demand are both bad for oil prices.
“We may be seeing signs that global production is strong, and whenever markets see a decline in oil prices they worry it’s actually an indication of weak demand,” she said.
HEALTH VOTE: The House of Representatives passed a revised bill that would roll back much of the 2010 Affordable Care Act. Health care stocks didn’t move much overall. Drug companies traded a bit higher while major health insurers were mixed and hospitals slipped. It’s not clear if the bill can pass the Senate, or how Senators might change it if it does.
As currently written, the American Health Care Act would rework subsidies for private insurance, limit federal spending on Medicaid for low-income people and cut taxes on upper-income individuals used to finance Obama’s overhaul.
Elsewhere animal health products maker Zoetis and prescription drug distributor AmerisourceBergen rose after they delivered their first-quarter reports.
HOUSEHOLD GOODS: Church & Dwight, which makes Arm & Hammer baking soda, Trojan condoms and OxiClean cleaning products, raised its profit estimate after its first-quarter results were better than analysts expected. Its stock rose $1.92, or 3.9 percent, to $50.67. Frosted Flakes and Pop Tarts maker Kellogg posted a larger profit than excepted and its stock picked up 99 cents, or 1.4 percent, to $69.93 even though the company’s sales weren’t as high as investors had hoped.
FED IN FOCUS: On Wednesday the Federal Reserve left interest rates unchanged, as investors expected. However the Fed said it expects the economy to recover from its sluggish growth in the first quarter, and that’s a hint the central bank expects to raise rates again soon. That’s aiding bond yields and the dollar.
Bond prices dropped. The yield on the 10-year Treasury note rose to 2.35 percent from 2.32 percent. That helped bank stocks because it allows them to make bigger profits on loans.
NO LIKES: Facebook’s first-quarter profit and sales were stronger than expected, but the social network’s stock dipped 95 cents to $150.85. Facebook’s stock is up 31 percent this year and is trading at all-time highs.
HANGING UP: Telecommunications companies slumped after Level 3 Communications and CenturyLink both disappointed Wall Street with their first-quarter results. Level 3 dropped $2.57, or 4.2 percent, to $57.86 and CenturyLink sank $1.65, or 6.5 percent, to $23.78.
BANKING ON IT: Tennessee-based First Horizon agreed to buy North Carolina’s Capital Bank Financial in a deal the companies valued at $2.2 billion. They said it will make one of the largest regional banks in the Southeastern U.S. However investors were far from excited and both stocks slumped. Capital Bank fell $2.40, or 5.7 percent, to $39.65 and First Horizon National declined 41 cents, or 2.2 percent, to $18.41.
METALS PRICES: Precious metals prices dropped further. Gold sank $19.90, or 1.6 percent, to $1,228.60 an ounce. Silver fell 24 cents, or 1.5 percent, to $16.30 an ounce. Copper lost 3 cents, or 1.3 percent, to $2.51 a pound.
CURRENCIES: The dollar turned lower and slipped to 112.42 yen from 112.64 yen. The euro rose to $1.0978 from $1.0906.
OVERSEAS: The CAC 40 in France rose 1.3 percent following a debate French presidential candidates Emmanuel Macron and Marine Le Pen. Macron has a large lead in the polls ahead of Sunday’s vote. He is perceived to be more business-friendly and is an advocate of France’s continued use of the euro and membership of the European Union. That helped send the euro higher Thursday.
Germany’s DAX rose 1 percent and the FTSE 100 index in Britain added 0.2 percent.
The South Korean Kospi added 1 percent and Hong Kong’s Hang Seng edged 0.1 percent lower. Japan’s market remained closed for a holiday.