Tech and energy shares weigh on market sentiment
U.S. stocks closed lower on Thursday, 15 June 2017 as both tech and energy names sold off a day after the Federal Reserve raised interest rates and the emergence of reports that President Donald Trump may be under special counsel investigation.
The Dow Jones Industrial Average closed down 14.66 points, or less than 0.1%, at 21,359.90. The S&P 500 index declined 5.46 points, or 0.2%, to finish at 2,432.46, with the materials, energy and tech sectors leading the index lower. The Nasdaq Composite Index fell 29.39 points, or 0.5%, to close at 6,165.50.
Equity indices opened Thursday's session solidly lower as investors continued to chew on Wednesday's policy announcement from the Federal Open Market Committee (FOMC), which was replete with a rate hike of 25 basis points, projections for an additional rate hike this year, and a specific plan for how the Fed will start to normalize its balance sheet. The policy prescription left some market participants skeptical as it comes in the face of inflation readings that still remain below the Fed's longer-run target of 2.0%. Specifically, the fear is that the economic recovery effort could come to a halt if the U.S. central bank tightens policy too much and/or too soon.
Fed Chairwoman Janet Yellen and her colleagues laid out a plan to shrink the central bank's massive $4.5 trillion balance sheet starting this year, as they raised a key U.S. interest rate.
The U.S. Dollar Index rose 0.6% with the greenback adding 0.7% and 1.2%, respectively, on the euro and the yen. However, the British pound showed relative strength, adding 0.1% against the U.S. dollar, after the Bank of England decided to maintain its key rate and purchasing program in a split, 5-3 vote.
Among stocks under focus, shares of Nike weighed heavily on the average following announced job cuts.
Among tech stocks, Facebook fell 0.3%, while Google parent company Alphabet was off 0.8%. Among other big decliners, Amazon.com shed 1.3% and Apple was down 0.6%.
Bullion metals ended lower at Comex on Thursday, 15 June 2017 at Comex. Gold prices marked their lowest settlement in three weeks on Thursday, building on a retreat that started Wednesday afternoon as the Federal Reserve raised interest rates and sounded determined to hike again this year.
August gold fell by $21.30, or 1.7%, to settle at $1,254.60 an ouncethe lowest most-active contract finish since 24 May 2017. July silver tumbled by 42 cents, or 2.5%, to $16.716 an ounce, for the lowest settlement in about a month.
In the latest economic data, jobless claims fell by 8,000 in the latest week, with the monthly average in May falling to a 44-year low. Separately, the Philadelphia Fed manufacturing index in June retreated to a reading of 27.6 from 38.8 in May, while the Empire State index rebounded to a reading of 19.8 from negative 1. Also. industrial output was flat in May, slightly below expectations for a rise of 0.1%.
Oil settled with a modest loss on Thursday, 15 June 2017 at Nymex following sharp declines in the prior session, as data showing that the global market remains awash in surplus oil, rising U.S. crude production and weak domestic gasoline demand kept pressure on prices. Natural-gas futures, meanwhile, rallied to their highest finish of the month to date, with traders encouraged by a rise in weekly U.S. supplies of the fuel that came in below market expectations.
July West Texas Intermediate crude fell 27 cents, or 0.6%, to settle at $44.46 a barrel on the New York Mercantile Exchange after losing 3.7% a day earlier. For a second-straight session, it finished at its lowest level since Nov. 14, 2017. August Brent crude on London's ICE Futures exchange gave up 8 cents, or 0.2%, to $46.92 a barrel.
Oil prices tanked by nearly 4% to their lowest level since November on Wednesday, following U.S. Energy Information Administration data that showed the decrease in crude stockpiles last week was smaller than anticipated. Compounding the woes was the unexpected increase in gasoline stocks, surprising many who expected much of the excess gasoline to be mopped up during the U.S. summer driving season.
In the bond market, U.S. Treasuries spent the day unwinding some of Wednesday's gains. The 10-yr yield climbed three basis points to 2.16% while the 2-yr yield (1.35%) moved higher by two basis points.
On Friday, investors will receive May Housing Starts (consensus 1.227 million) and the preliminary reading of the University of Michigan Consumer Sentiment Index for June (consensus 97.0). The two reports will cross the wires at 8:30 ET and 10:00 ET, respectively.
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