Oil prices are plunging again Thursday and energy companies are taking sharp losses. While most U.S. stocks are falling in afternoon trading, major indexes are little changed. Household goods makers are getting a lift from some solid earnings reports. Health care stocks are little changed after as the House of Representatives passed a bill intended to roll back much of former President Barack Obama’s health care law.
ON WALL STREET: At the close, the Standard & Poor’s 500 index was up 1.4 points, about 0.06 percent, at 2,389.5. The Dow Jones industrial average lost 6.4 points, about 0.03 percent, to 20,951.5. The Nasdaq composite closed up 2.8 points, about 0.05 percent, at 6,075.3. On the New York Stock Exchange, two out of every three stocks fell.
Investors may be moving cautiously before the government releases its monthly jobs report Friday.
Bond prices dropped. The yield on the 10-year Treasury note rose to 2.356 percent from 2.32 percent. That helped bank stocks because it allows them to make bigger profits on loans.
OIL PRICES: U.S. benchmark crude futures shed another $2.37 to $45.52 a barrel on the New York Mercantile Exchange. In London on the Intercontinental Exchange Europe, Brent crude, the standard for international oils, fell $2.40 to $48.39 a barrel. Oil was already trading at its lowest price since November as investors wonder if the OPEC cartel will extend an agreement to cut production and support prices. OPEC nations will discuss that deal later this month.
Exxon Mobil closed down $1.07 at $81.51 and EOG Resources lost $3.18, or 3.5 percent, to $88.63. Chesapeake Energy tumbled 41 cents, or 7.3 percent, to $5.14.
ANALYST’S VIEWPOINT: Analyst Kate Warne, an investment strategist for Edward Jones, said oil prices have slipped recently because of an accumulation of concerns about rising energy production in the U.S. and slower economic growth in both the U.S. and China. High supply and lower demand are both bad for oil prices.
“We may be seeing signs that global production is strong, and whenever markets see a decline in oil prices they worry it’s actually an indication of weak demand,” she said.
HEALTH VOTE: The House of Representatives passed a revised bill that would roll back much of the 2010 Affordable Care Act, but health care stocks didn’t move much overall. Drug companies traded a bit higher while major health insurers were mixed and hospitals slipped. It’s not clear if the bill can pass the Senate, or how senators might change it if it does.
As currently written, the American Health Care Act would rework subsidies for private insurance, limit federal spending on Medicaid for low-income people, and cut taxes on upper-income individuals used to finance Obama’s overhaul.
“I think investors will be relieved that the House has reached agreement on one of their main initiatives which also suggests that they’ll make progress on some of President Trump’s pro-growth initiatives,” said Warne.
HOUSEHOLD GOODS: Church & Dwight, which makes Arm & Hammer baking soda, Trojan condoms and OxiClean cleaning products, raised its profit estimate after its first-quarter results were better than analysts expected. Its stock rose $1.92, or 3.9 percent, to $50.67. Frosted Flakes and Pop Tarts maker Kellogg posted a larger profit than excepted and its stock picked up 99 cents, or 1.4 percent, to $69.93 even though the company’s sales weren’t as high as investors had hoped.
FED IN FOCUS: A day ago the Federal Reserve left interest rates unchanged, which investors expected. However the Fed said it expects the economy to recover from its sluggish growth in the first quarter, and that’s a hint the central bank expects to raise rates again soon. That’s aiding bond yields and the dollar.