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US stocks rudderless after higher oil prices cancel out poor labour data

Last updated: 16:00 05 Jan 2017 GMT, First published: 09:07 05 Jan 2017 GMT

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US stock tickers pared losses early on Thursday as oil prices lifted and cancelled out a slew of poor labour market data and company-specific news which upset investors.

As well as weaker-than-forecast private sector non-farm ADP data, the ISM non-manufacturing employment index dropped to 53.8 in December from 58.2 – albeit a figure above 50.0 still means expansion - and Challenger job cuts in December were 33,600, up from 26,900 the previous month.

The S&P 500 market bellwether was flat at 2271 while the Dow Jones Industrial Average was unchanged at 19,942.

The top gainer on the S&P 500 was Alexion Pharmaceuticals Inc (NASDAQ:ALXN), up 8.5% at $137.95 after the filing of its Form 10-Q with the Securities and Exchange Commission for the three quarters ended Sep 30, 2016. Shares of the company gained approximately 5% on Jan 4, during the after-hours trading session.

Alexion also reiterated its outlook for 2016, providing much-needed respite to investors. The company expects earnings within the previously guided range of $4.50 to $4.65 per share in 2016. Revenues are also anticipated to be within the previously guided range of $3.05 to $3.10bn.

In Nov 2016, Alexion had disclosed that there will be a delay in the filing of the company’s 10-Q as the Audit and Finance Committee was conducting an investigation into allegations made by a former employee regarding its sales practices involving its key drug, Soliris.

Oil stocks also featured in the gainers, with Transocean Inc (NYSE:RIG), Chesapeake Energy (NYSE:CHK) and Devon Energy (NYSE:DVN) all in the top ten risers.

The US oil benchmark WTI was up 1.1% at $53.86.

But the downside was at least as marked, as retailers took a thumping following negative news from Macy’s (NYSE:M) and Kohl’s Corp (NYSE:KSS). The stocks led the losers, with Kohl’s down 18% to $42.55 and Macy’s down 14.2% to $30.78. Third-biggest faller was another retailer, Nordstrom (NYSE:JWN) down 9.6% at $44.24, followed by L Brands Inc (NYSE:LB), Signet Jewelers Ltd (NYSE:SIG), and others.

But smaller caps saw some correction. Earlier in the week they outperformed the large caps.

The S&P Midcap 400 was down 0.2% at 1692 and led by Gartner Inc (NYSE:IT) down 7.2% to $94.50. The management consultant said it was buying CEB (NYSE:CEB) for $2.6bn in cash and stock. CEB shares were up 21.5% to $75.20 and dominated the S&P 400 gainers.

The downside was littered with retail and fashion stocks, just like the S&P 500. Fossil Group (NYSE:FOSL) and JC Penney (NYSE:JCP) were 6% lower.

The S&P Smallcap 600 shed the most, 0.6%, to 852 and was led by Resources Connect (NASDAQ:RECN) down 11.3% to $17.43.

Meanwhile, the shares of Monsanto (NYSE:MON) picked up after the agrichemicals firm returned to profit in its first quarter helped by strength in South America. The shares were up 0.7% at $105.78.


Pre-Open

US stocks are headed for a lower start on Thursday as weaker private sector job creation data and a drubbing for retailers erased optimism from earlier in the week.

The market is likely to give back some of its automotive and oil-fuelled gains of Wednesday when 84% of NYSE stocks gained and only 16% fell.

The S&P 500 market bellwether is seen opening down 0.1%, the Nasdaq Composite down 0.2% and the Dow Jones Industrial Average down 0.08%.

Shares in American retailers Macy's (NYSE:M) and Kohl's (NYSE:KSS) plunged overnight.

Investors hit the sell button after Macy's issued a disappointing earnings report after the bell and said it will close 68 stores and cut more than 10,000 jobs. Shares were down 10.7% at $32.00 pre-market.

Kohl's stock is also sharply lower – by 14.7% at $44.28 pre-market - based on disappointing holiday sales.

The US private sector added fewer jobs in December than Wall Street analysts had predicted, pointing to signs that the pace of job growth has slowed as the labour market nears full employment.

The non-farm private sector added 153,000 jobs last month, according to data from payroll processor ADP on Thursday. That’s below the 175,000 forecast.

The data is a precursor to Friday’s closely-watched US non-farm payrolls data for December.

Staying with manpower issues, Google owner Alphabet Inc (NASDAQ:GOOGL) shares were off 0.2% at $806.50 after the US Department of Labor filed a lawsuit against Google to get it to turn over employee compensation data.

The data request is part of a routine audit into Google's equal opportunity hiring practices, which is required because of the company's role as a federal contractor. According to the lawsuit, Google has repeatedly refused to provide employee details.

Google responded by criticising the data requests as "overbroad in scope."

But in an echo of Barclays tussle with the Department of Justice in a separate litigation process, this spat could be bad for Google's business because the Labor Department is now requesting that a judge order all of Google's federal contracts canceled unless it complies with the request.

Constellation Brands, Inc. (NYSE:STZ) shares were down 2.5% at $154 pre-market after an underwhelming third-quarter earnings result before the bell.

The maker of Corona and other alcoholic drinks on Thursday reported fiscal third-quarter profit of $405.9 million.

The Victor, New York-based company said it had net income of $1.98 per share. Earnings, adjusted for non-recurring gains, came to $1.96 per share.

The wine, liquor and beer company posted revenue of $1.81bn in the period.

Constellation Brands expects full-year earnings in the range of $6.55 to $6.65 per share.

On the upside for one stock, but the shares don’t reflect it, is Walgreens Boots Alliance (NASDAQ:WBA). The shares dipped by 0.04% pre-market despite growing confidence that regulators will greenlight its planned $17.2bn acquisition of rival Rite Aid has prompted pharmacy chain Walgreens Boots Alliance to boost the lower end of its full-year earnings guidance.

The operator of Walgreens and Duane Reade drugstores said it now expects adjusted diluted net earnings per share for the fiscal 2017 year (which ends in August) to come in at $4.90 to $5.20, compared to its previous forecast of $4.85 to $5.20.

 

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