Wall Street slips as consumer stocks, oil drag

By Tanya Agrawal

(Reuters) - Wall Street gave up early gains and slipped into the red in afternoon trading on Thursday, dragged down by consumer discretionary stocks and retreating oil prices.

Oil prices had jumped on concerns that a huge wildfire in Canada's oil sands region and escalating tensions in Libya would hit supply, but later slipped well off their highs. [O/R]

"The fact that oil started off strong today and has weakened is probably a net negative for risk appetite in the near term," said Chris Konstantinos, head of international portfolio management at RiverFront Investment Group in Richmond, Virginia.

Investors were also bracing for Friday's U.S. jobs data for April as any signs of a strengthening labour market could influence the pace of rate hikes.

 

Nonfarm payrolls likely rose by 202,000 last month, after rising 215,000 in March, while the unemployment rate is forecast to hold at 5 percent.

Global headwinds that have partly prevented the U.S. central bank from raising rates again may have dissipated, St. Louis Federal Reserve President James Bullard said on Thursday.

Still, traders are pricing in only one increase later this year.

An accommodative Federal Reserve and a recovery in oil prices have helped U.S. stocks rebound from sharp losses at the start of the year.

However, the rally lost momentum in the past two weeks, weighed down by underwhelming quarterly earnings and mixed economic data.

At 13:57 p.m. ET (1757 GMT) the Dow Jones industrial average <.DJI> was down 17.6 points, or 0.1 percent, at 17,633.66, the S&P 500 <.SPX> was down 3.6 points, or 0.18 percent, at 2,047.52 and the Nasdaq Composite <.IXIC> was down 11.24 points, or 0.24 percent, at 4,714.40.

Amazon's 1.7 percent fall weighed the most on the S&P and Nasdaq, while the Dow was dragged down by Caterpillar's 1.8 percent fall.

Eight of the 10 major S&P sectors were lower, with the consumer discretionary index's <.SPLRCL> 0.64 percent fall leading the decliners.

Data on Thursday showed the number of Americans filing for unemployment benefits rose more than expected last week, posting the biggest jump in more than a year, but the underlying trend continued to point to a strengthening labour market.

Tesla reversed premarket gains to trade down 4.9 percent after analysts expressed doubts about the electric carmaker's ability to deliver vehicles ahead of schedule.

Fitbit fell 18.2 percent to $14.06 after the wearable fitness device maker's profit forecast for the current quarter fell far short of analysts' estimates.

Alibaba was up 3.8 percent at $78.76 as China's biggest e-commerce company said fourth-quarter revenue rose 39 percent.

Kraft Heinz jumped as much as 5.2 percent to a record high of $84.17 after its quarterly profit smashed analysts' estimates.

Declining issues outnumbered advancing ones on the NYSE by 1,587 to 1,325. On the Nasdaq, 1,641 issues fell and 1,094 advanced.

The S&P 500 index showed 20 new 52-week highs and five new lows, while the Nasdaq recorded 31 new highs and 50 new lows.

(Reporting by Tanya Agrawal and Sam Forgione; Editing by Anil D'Silva)