MARKET SNAPSHOT: U.S. Stocks Try To Avoid 3-day Slide A Day Ahead Of Jobs Report

By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch

Jobless claims miss expectations; L Brands, FitBit, Tesla, Merck tumble on weak earnings

U.S. stocks were sinking Thursday afternoon as a rally in oil futures lost steam while a stronger dollar, weak economic data and disappointing earnings soured investors' appetite for risk.

Investors are particularly skittish ahead of closely report on the labor market due Friday.

The S&P 500 index was last down 1 points, or 0.1%, to 2,049, with relatively broad-based declines throughout the S&P 500's 10 sectors. Only energy, up 0.5%, and health-care, 0.4% higher, were bucking the trend lower.

The Dow Jones Industrial Average fell 10 points, or 0.1%, to 17,640, led by a 1.8% drop in Caterpillar Inc.(CAT), which was the target of short-betting strategy by hedge-fund investor David Einhorn on Wednesday at the Ira Sohn Investment. Another blue-chip, Merck & Co. Inc (http://www.marketwatch.com/story/merck-beats-profit-expectations-bumps-up-full-year-guidance-range-2016-05-05).(MRK), declined after weak results.

The Nasdaq Composite fell 10 points, or 0.2%, to 4,713. The tech-heavy benchmark has been down 10 of the past 11 sessions.

Earlier, stocks were trading modestly higher, boosted by a surge in oil prices on worries that wildfires raging in Alberta could hamstring crude supply, as they disrupted output from Canada's oil sands industry (http://www.marketwatch.com/story/oil-prices-rise-as-canadian-wildfire-threatens-output-2016-05-05).

See also: How a raging inferno in Alberta is hobbling oil production (http://www.marketwatch.com/story/how-a-raging-inferno-in-alberta-is-hobbling-oil-production-2016-05-05)

But stocks moved lower as the oil rally lost steam. Weak data on the U.S. labor market and a strong dollar also weighed on risk appetite.

"We're in this stall-speed market, where sentiment can only take us so far before the data smack us in the face," said Mike Antonelli, equity sales trader at R.W Baird & Co.

According to Antonelli, investors were getting worried by the dollar's (http://www.marketwatch.com/story/dollar-set-to-gain-against-euro-yen-for-a-3rd-day-2016-05-05) three-day sharp advance and were reluctant to buy stocks ahead of Friday's closely watched official jobs report. The ICE U.S. Dollar Index was up 0.6% Thursday afternoon in New York and on track to track to post a 0.7% weekly gain.

On Thursday, data showed the number of Americans who applied for unemployment benefits (http://www.marketwatch.com/story/us-jobless-claims-climb-17000-to-274000-2016-05-05) at the end of April rose to a five-week high, missing economists' expectations.

The jobless-claims data came one day after a weaker-than-expected report on private-sector payrolls and a decline in worker productivity, which pushed stocks to finish lower on Wednesday (http://www.marketwatch.com/story/us-stock-futures-mired-in-red-with-private--payrolls-data-on-tap-2016-05-04).

Still, the fact that the main benchmarks are still trading in a narrow range could suggest that evidence of weakness in the labor market is viewed as justification for the Federal Reserve to delay further interest-rate hikes this year, particularly since inflation remains subdued (http://www.marketwatch.com/story/heres-why-inflation-might-be-this-markets-bogeyman-2016-05-05), said Jeff Carbone, managing director at wealth manager Cornerstone Financial Partners.

Meanwhile, analysts were watching key technical indicators that were flashing warning signals, most notably that the S&P is now noticeably below its 20-day moving average. Wednesday, the index fell more than 3% below its recent highs, a drop that last occurred in November.

The slow, yet consistent selloff over the past two weeks has kept the S&P 500 confined to a "clear downward sloping channel," said Frank Cappelleri, technical analyst at Instinet.

"While not a crash by any means, the recent action has altered the market's complexion," Cappelleri said. "This was inevitable, of course. Now the market must prove it can take a punch, which could prove challenging."

Data and Fed speakers: Fed officials maintained a slightly more hawkish tone, which first re-emerged in remarks late last week.

San Francisco Fed President John Williams said Thursday two or three interest rate increases this year is "reasonable," but the U.S. central bank will continue to watch economic data, during an interview with CNBC. (http://www.cnbc.com/2016/05/05/feds-williams-all-the-data-pointing-to-the-right-direction-in-the-labor-market.html)

St. Louis Fed President James Bullard said weak economic growth caused him to moderate his support for a rate hike at the Fed's April meeting. He stressed that all options are on the table for the Fed's upcoming meeting in June (http://www.marketwatch.com/story/feds-bullard-says-weak-growth-led-him-to-dial-back-support-of-april-rate-hike-2016-05-05).

However, Atlanta Fed President Dennis Lockhart said he's "on the fence" about raising interest rates at the Fed's next meeting in June. He made his comments during an interview on CNBC Thursday afternoon.

Williams and Bullard will also appear on a panel on "international monetary policy and reform in practice" at the Hoover Institute conference in Stanford University at 7:15 p.m. Eastern.

Stocks to watch:Tesla (http://blogs.marketwatch.com/thetell/2016/05/04/tesla-results-to-include-model-x-sales-model-3-prep-live-blog/)(TSLA) fell 3.9% despite the fact that the electric-car maker posted a narrower-than-expected first-quarter adjusted loss and sales that were in line with Wall Street's forecasts late Wednesday.

Read:Elon Musk promises Tesla will do the improbable (or even impossible) (http://www.marketwatch.com/story/elon-musk-promises-tesla-will-do-the-improbable-or-even-impossible-2016-05-04)

Alibaba (http://www.marketwatch.com/story/alibabas-stock-surges-as-sales-beat-offsets-profit-miss-2016-05-05)(BABA) gained 4.3% after strong results.

L Brands Inc. (LB) plunged 11.7% after the retailer reported fiscal first-quarter sales that missed expectations.

And Fitbit Inc (http://www.marketwatch.com/story/fitbit-shares-plunge-on-weak-quarterly-outlook-2016-05-04).(FIT) dived 17.2% on a weak quarterly outlook.

Avon Products Inc.(AVP) fell 3.4% after reporting that its loss worsened in the most recent quarter (http://www.marketwatch.com/story/avon-loss-widens-on-dollar-and-restructuring-costs-2016-05-05).

SeaWorld Entertainment Inc.(SEAS) fell 6.2% after the company, which recently said it would abandon breeding its signature killer whales, announced Thursday that a measure of profit for the year would land below analysts' expectations (http://www.marketwatch.com/story/seaworld-shares-drop-on-soft-outlook-2016-05-05).

Kellogg Co. (K) fell 2.3% after the food company said sales fell short of estimates (http://www.marketwatch.com/story/kellogg-reports-quarterly-sales-decline-largely-due-to-venezuela-business-2016-05-05).

Whole Foods Market Inc (http://www.marketwatch.com/story/whole-foods-market-cuts-annual-guidance-2016-05-04-17485469).(WFM) gained 5.3% after the company cut its annual guidance, though profit slight beat Wall Street forecasts. Kraft Heinz Co (http://www.marketwatch.com/story/kraft-heinz-rallies-as-first-quarter-earnings-beat-expectations-2016-05-04).(KHC) rose 3.7% after better-than-expected earnings.

After the close, Square Inc.(SQ), GoPro Inc.(GPRO), FireEye Inc.(FEYE), News Corp(NWS.AU), which owns MarketWatch, the publisher of this report, Yelp Inc.(YELP), DreamWorks Animation SKG Inc.(DWA) and Herbalife Ltd.(HLF) will report.

AT&T Inc.(T) unwound a 15-year partnership with Yahoo Inc.(YHOO) and awarded the contract to Web and mobile portals to Synacor Inc.(SYNC).

Alphabet Inc.'s(GOOGL) YouTube will be offering a paid subscription bundle of streaming TV channels as soon as next year, Bloomberg News reported on Wednesday (http://www.marketwatch.com/story/youtube-reportedly-planning-streaming-tv-service-2016-05-04).

Other markets:Asian markets (http://www.marketwatch.com/story/asian-stocks-stymied-by-weak-china-services-data-2016-05-05) had a mostly lackluster session, with appetite for equities dampened by news that China's service activity grew at a slower pace in April. Fears over slowing economic growth world-wide has been a factor in driving down global equity prices this week.

European stocks (http://www.marketwatch.com/story/european-stocks-break-four-day-losing-run-as-oil-prices-rally-2016-05-05) snapped a four-day losing streak, led by gains for major oil producers.

Gold prices (http://www.marketwatch.com/story/gold-books-loss-ahead-of-friday-jobs-report-looms-2016-05-05) logged a loss, weighed by a rebound in the U.S. dollar.

(END) Dow Jones Newswires

May 05, 2016 15:44 ET (19:44 GMT)

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