U.S. Stocks Little Changed as Oil Wavers
29 September 2016 - 4:05PM
Dow Jones News
By Mike Bird
U.S. stocks were little changed as oil prices wavered following
the announcement of a prospective deal between major oil-producing
nations to cut production levels.
The Dow Jones Industrial Average rose 20 points, or 0.1%, to
18359 and the S&P 500 rose less than 0.1%. The Nasdaq Composite
slipped 0.2%, weighed down by a second day of declines in
biotechnology shares.
Stocks in Europe and Asia rallied after Wednesday's gains in the
U.S., when the S&P 500's energy sector had its biggest one-day
gain since January.
But oil prices fluctuated Thursday as analysts were cautious
about the impact of the deal. U.S. crude oil prices edged up 0.2%
to $47.14 a barrel, after rising more than 5% a day earlier.
"We're not actually talking about a very large reduction here,
it's more like a freeze at pretty high production levels," said
Mike Bell, global market strategist at J.P. Morgan Asset
Management. "It's very hard for oil to go much above $60 per barrel
because U.S. producers pretty much all start to become profitable
again."
Members of the Organization of the Petroleum Exporting Countries
said they had proposed cutting their collective output to between
32.5 million and 33 million barrels a day, down from August levels
of 33.2 million barrels a day. The group, however, deferred the
task of completing a plan to make those cuts until November.
Investors were also assessing the latest U.S. economic data.
The Commerce Department said Thursday that the U.S. economy grew
at a faster pace in the second quarter than previously estimated.
However, the latest data showed the expansion decelerated in the
first half of the year.
Also, the number of Americans applying for first-time
unemployment benefits rose last week but remained at a low level
consistent with a generally healthy labor market, data from the
Labor Department showed.
Fed funds futures, used by investors and traders to place bets
on central-bank policy, rose slightly. They showed a 57%
probability of an interest-rate increase from the Federal Reserve
by December, according to data from CME Group, up from 53% a day
earlier.
On Wednesday, Federal Reserve Chairwoman Janet Yellen said that
interest-rate increases were on the way but that there was "no
fixed timetable."
Utilities shares -- popular this year while rates have been low
because they tend to pay steady dividends -- fell 0.6% in the
S&P 500 on Thursday.
The yield on the 10-year Treasury note rose to 1.582%, according
to Tradeweb, from 1.567% Wednesday.
The WSJ Dollar Index, which tracks the U.S. currency against 16
others, rose 0.2%.
Earlier, Asian shares rose following the OPEC news, led by a
1.4% climb for Japan's Nikkei Stock Average. The Stoxx Europe 600
rose 0.6%, led by oil and gas shares and basic resources
stocks.
Banks were among the gainers in Europe. Deutsche Bank shares
rose 0.8%. The German lender's shares have been watched closely by
investors following The Wall Street Journal's report that the bank
has been asked to pay $14 billion by U.S. authorities to settle a
set of high-profile mortgage-securities probes stemming from the
financial crisis. Shares are down roughly 5% so far this week.
Commerzbank bucked the trend, with shares falling 2.2% after the
bank announced that it was scrapping its dividends and laying off
around 20% of its workforce.
In currency markets, the dollar rose 0.6% against the yen to
Yen101.505. Bank of Japan Governor Haruhiko Kuroda gave a speech in
early European hours, reiterating that the central bank could cut
benchmark interest rates or expand asset purchases further.
Write to Mike Bird at Mike.Bird@wsj.com
(END) Dow Jones Newswires
September 29, 2016 10:50 ET (14:50 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.