A flood of depressing news from the oil sector as well as worries about global growth prospects helped push Wall Street tickers into the red by Thursday's close.
Breaking a three-day rally, the Nasdaq Composite ended down 1% at 4,487, S&P500 down 0.5% at 1,1917, and the Dow Jones Industrial Average down 0.25% at 16,413.
The oil sector's losing streak was lead by Ultra Petroleum (NYSE:UPL). As reported by Proactiveinvestors.com, the company's shares tanked 40% on Thursday after the company said it was exploring restructuring options. The company revealed the news with its downbeat 2015 earnings.
Other oil sector stocks on the slide included Perrigo (NYSE:PRGO) down 10.2% at $130.40 after the company reported lower-than-expected 2015 fourth quarter results.
Meanwhile, Newfield Exploration (NYSE:NFX) was down 9.1% to $22.60, Anadarko Petroleum (NYSE:APC), down 8.6% at $37.03, and Marathon Oil (NYSE:MRO) down 6.5% at $6.93. In fact the top eight fallers on the S&P500 index in percentage terms were all energy companies.
Oil prices, as measured by the US benchmark West Texas Intermediate, was down 0.5% at $30.51
But the state of economic growth also loomed large on investors' minds. Risks to global growth have increased since November and policymakers are running out of ideas to combat the malaise, according to a report from ratings agency Moody's on Thursday.
Moody's said that growth prospects were held back by China's slowdown and falling commodity prices.
In the US, Moody's said it did not foresee Fed rates rising up to 2% this year and predicted that Gross Domestic Product for the world's biggest economy would be 2.4% - same as in 2015.
Mid-Session
After a mixed start, all Wall Street tickers had edged south by mid-session on Thursday, as a three-day rally ended after Wal-Mart led a sell-off among US retailers and fresh volatility put paid to cheers that oil prices were creeping up towards $31.
The Nasdaq Composite was down 0.6% at 4,506, the S&P500 down 0.3% at 1,921 and the Dow Jones Industrial Average down 0.2% at 16,423.
But it was Wal-Mart (NYSE:WMT) which weighed on tickers, down 3.3% at $63.95 after disappointing earnings.
The West Texas Intermediate, the US benchmark for oil prices, was up 1% at $30.98 a barrel, but to little avail in the stockmarket as investors sought haven in US Treasuries and gold.
Open
It was a mixed start for equities, confounding expectations of a continuation of yesterday's trend, despite some decent economic data.
“A better than expected Philly Fed manufacturing index figure (at -2.8 against -3.5 last month) and the best jobless claims figure since the end of November (at 262k) were hardly enough to justify a major move upwards for the US index, which pootled along at a rather uninspiring pace as Thursday continued,” observed Connor Campbell at Spreadex.com.
The Dow Jones industrial average edged up 21 points to 16,475, despite an unhelpful performance by retail giant Walmart, but the S&P 500 gave up four points at 1,923 and the Nasdaq Composite retreated 17 points to 4,517.
Walmart declined 4.9% to $62.90 as fourth quarter profits missed estimates and the world's largest retailer by turnover scaled back sales guidance for the current year.
Insurance outfit Triple-S Management (NYSE:GTS), up 15.2%, provided some cheer with its fourth quarter numbers, as did print products manufacturer Cenveo (NYSE:CVO), up 12.7%.
In contrast, Momenta Pharmaceuticals (NASDAQ:MNTA) fell 8.3% to $10.55, as the company posted a narrower full-year loss for 2015 of $83.3mln, versus a loss of $98.6mln the year before.
The fourth quarter loss per share of 43 cents was much worse than the four cents loss analysts had been expecting.
Preview
Ahead of the release of the Philadelphia Fed Manufacturing Index and the weekly jobs figures, investors are in the mood to let the good times keep rolling.
Spread betting quotes indicate the S&P 500 will open a shade above 1,933, after closing 1.7% higher at 1,927 yesterday. The Dow Jones industrial average is headed for a 70 point rise after advancing 1.6% on Wednesday to 16,453.
The market has had the opportunity to mull overnight the minutes from the late January meeting of the Federal Open Market Committee, which according to the Royal Bank of Scotland's chief US economist, Michelle Girard, underscored the increased uncertainty among policy makers over the economic outlook.
“For now, the Fed appears to be in a period of 'watchful waiting' (though Yellen did not incorporate this phrase into her testimony last week, other Fed officials have used it in recent weeks). While we acknowledge the Fed may wait longer than March to act again (in order to better assess the balance of risks), we still believe the odds are high that the Fed moves by June (we would not discount an April hike),” Girard wrote.
Rabobank echoed that view, saying most policy-makers were of the view that uncertainty had increased, with some of the opinion that recent developments had increased the level of downside risks or that the risks were no longer balanced.
The oil price was holding steady in electronic trading ahead of Wall Street's open and the release at 11.00am of the weekly update on crude oil inventories from the Energy Information Administration.
On the corporate front, Devon Energy (NYSE:DVN) shares were sliding in pre-market trading after the company planned to raise almost $1.5bn through a share issue.
Results are due out today from retail giant Walmart (NYSE:WMT) and hotels groups Hyatt (NYSE:H) and Starwood (NYSE:HOT).