US stocks are lower Thursday afternoon as investors sell utility and phone company stocks, safe-play assets they’ve favored in the wake of Britain’s vote to leave the European Union last month.
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Nate Thooft, head of global asset allocation for Manulife Asset Management, noted that stocks and oil prices have often traded in tandem this year. Energy producers reversed a 1 per cent climb while Chevron lost 1.5 per cent. Phone companies and utilities slumped at least 1.6 per cent, the biggest losers on the day.
Stocks started higher, building on gains from the previous day.
The Dow Jones Industrial Average jumped 204 points, or 1.1%, to 18,100, putting the blue-chip gauge on pace to close at its best level of 2016 and pushing it beyond its pre-Brexit level. About 6.7 billion shares traded hands on U.S. exchanges, 7 per cent below the three-month average.
ANALYST VIEWPOINT: “Oil will be front and center in the Asian session today in the wake of the weekly EIA oil inventories report which drove declines in the USA markets”, said IG market analyst Angus Nicholson, referring to the U.S. Energy Information Administration. “Stock markets aren’t cheap, by definition the bond market isn’t cheap, and globally the economy is struggling”.
Investors also expressed some caution about putting too much emphasis on a single strong monthly jobs report.
A report yesterday showed stronger-than-predicted expansion in services industries, boosting optimism the United States economy can weather any fallout from the UK’s decision to leave the European Union. The report will show the job growth and the unemployment rate for last month.
In economic data, the U.S. private sector added 178,000 jobs last month, payrolls processor ADP reported.
In economic news, the Ministry of Finance said that Japan had a current account surplus of 1.809 trillion yen in May.
FILE – This July 16, 2013, file photo, shows a Wall Street street sign outside the New York Stock Exchange. “The risk-on rally is off to the races with the central banks either sitting on their hands or contemplating further action”.
Among the other major gainers, Tokai Carbon is gaining nearly 5%, Tokyo Electron is rising nearly 4% and Nitto Denko is higher by 3.6%. (VZ) fell 1.9% and 1.6%, respectively.
Investors are also waiting for cues on the health of corporate America, with Alcoa Inc. unofficially kicking off the second-quarter earnings season next week. That would mark a fifth-straight quarterly drop, the longest streak since 2009. “The conviction for a Fed rate hike won’t quite be there yet, which could explain why we’re reacting positively”. “It’s solid, not stellar, but that’s what the market has needed”. Time Warner Inc. and Comcast Corp. gained more than 1.7 percent. It was narrower than analysts’ forecasts of a decrease of 2.3 million barrels. Aetna, the third-largest US health insurer, agreed to buy Humana a year ago for about $35 billion in cash and stock. Analysts surveyed by Bloomberg had forecast the EIA would report a decline of 2.5 million. People familiar with the matter said Aetna is preparing to meet with top regulators as it seeks to win antitrust approval for its $37 billion takeover of Humana. Western Digital stock rose $2.20, or 4.8 percent, to $47.66.
Shares in Juno Therapeutics Inc.(JUNO) skidded 26%, after the pharmaceutical company late on Thursday said its study of a cancer drug has been put on hold (http://www.marketwatch.com/story/juno-therapeutics-cancer-drug-study-put-on-hold- after-two-deaths-2016-07-07) by the Food and Drug Administration after two patient deaths.
In the mining space, BHP Billiton and Fortescue Metals are losing 1% each, while Rio Tinto is edging up 0.08%.
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Among shares moving on corporate news, WhiteWave Foods surged as much as 20 per cent after Danone agreed to buy the maker of Silk soy milk for about $10 billion.
