US stocks close mostly lower led by energy sector

Nasdaq defies the trend and ends higher

U.S. stocks closed mostly lower on Thursday, 26 February 2015 as downbeat economic data and the selling pressure from the energy sector weighed on the S&P 500 and Dow industrials. Data showed the inflation trend turned negative for the first time since 2009, largely thanks to cheaper gasoline prices. However, core consumer prices, excluding food and energy costs, inched up. First-time weekly jobless claims jumped more than expected, coming in above 300,000. But a big drop in oil prices triggered a sell-off in energy stocks.

The Dow Jones Industrial Average closed off 10.15 points at 18,214.42, retreating slightly from the record level reached on Wednesday. The Nasdaq Composite defied the general trend and rose 20.75 points, or 0.4%, to 4,987.89, only 12 points shy of 5,000. The S&P 500 index closed 3.12 points, or 0.2%, lower at 2,110.74.

The top-weighted technology sector received support from some of its largest components by weight like Apple, Google and Facebook. The three names gained between 1.1% and 2.2% with Apple climbing into the green after announcing a press event on March 9 where the company is expected to launch its wristwatch.

Economic data included Initial Claims, CPI, Durable Orders, and FHFA Housing Price Index. The initial claims level increased to 313,000 from an upwardly revised 282,000 (from 281,000) while the consensus expected an increase to 290,000. The Department of Labor reported that there weren't any special factors impacting the initial claims level.

The CPI index declined 0.7% in January after declining an upwardly revised 0.3% (from 0.4%) in December while the consensus expected a decline of 0.6%. As expected, a large drop in gasoline prices was the primary catalyst for the decline in consumer prices. Gasoline costs fell 18.7% in January after declining 9.2% in December. The resulting gasoline decline caused overall energy prices to fall 9.7% in January. Excluding food and energy, core CPI increased 0.2% in January after increasing 0.1% in December while the consensus expected an increase of 0.1%.

Durable goods orders increased 2.8% in January after declining a downwardly revised 3.7% (from 3.3%) in December while the consensus expected an increase of 1.7%.

Crude oil futures settled at their lowest level in nearly a month on Thursday, 26 February 2015 at Nymex with strength in the U.S. dollar adding insult to injury to a market that is already suffering from record-high crude supplies in the U.S. Natural-gas prices, meanwhile, dropped by almost 6% after U.S. government data showed that supplies fell less than expected last week despite the bitter cold in the eastern U.S. Industry experts pointed to the dollar's rise against the euro as the main driver for the abrupt plunge in oil.

April crude dropped $2.82, or 5.5%, to settle at $48.17 a barrel on the New York Mercantile Exchange. That was the lowest close for a most-active contract since late January.

Wednesday's U.S. weekly crude stockpile data was largely bearish with a larger-than-expected increase of 8.4 million barrels reported by the Energy Information Administration. But gasoline supplies fell by more than the market expected.

Tomorrow, the second estimate of Q4 GDP (consensus 2.1%) will be released while the Chicago PMI for February (consensus 58.0) will cross the wires at 9:45 ET. The day's data will be topped off with the 10:00 ET release of the final Michigan Sentiment Index for February (consensus 93.8) and the January Pending Home Sales report (expected 2.2%).

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