US stocks closed sharply lower on Thursday, unwinding most of the previous day’s oil-fuelled rally, after the latest Deutsche Bank (NYSE:DB) developments weighed on banks.
Deutsche Bank was back in the frame after news that some hedge funds had pulled their business from struggling lender Deutsche Bank shook traders’ confidence. The S&P 500 banks index slid almost 1.6% and Deutsche Bank’s shares were down 6.7% at $11.48.
The S&P 500 market bellwether ended down 0.9% at 2151. Although not the biggest fallers of the day – that accolade went to energy stocks where profit-taking ensued even as oil prices extended their gains for a second day – banks licked wounds from the Deutsche Bank fallout.
Among the biggest bank falls on Thursday were Goldman Sachs (NYSE:GS) down 2.8% to $158.95, State Street Corp (NYSE:STT) down 2.6% to $68.59, Dollar Tree Inc (DLTR) 2.6% to $77.36, Morgan Stanley (NYSE:MS) down 2.3% to $31.04 and Citigroup (NYSE:C) down 2.3% to $45.80.
Although some analysts have questioned whether the Algiers agreement by OPEC members on Wednesday to modestly curb oil supply from November will even happen, oil prices rose again on Thursday after an initial wobble at the start of the New York session.
The US oil benchmark WTI was up 1.2% to $47.61.
The S&P Midcap 400 index ended down 1.1% at 1539 while the S&P Smallcap 600 finished down 1.2% at 748.
While the S&P 500 index’s oil components tended to suffer a bout of profit-taking, those in the mid- and small-cap tickers tended to be top risers, on the back of the continued oil price gains.
The worst overall drop was by the wider small-cap ticker Russell 2000, which shed 1.4% to 1237 and was led by Intra-Cellular Therapies (NASDAQ:ITCI) down 63.6% to $15.42 after announcing disappointing top-line data from the second phase III study (Study ‘302) on its lead pipeline candidate, ITI-007, for the treatment of schizophrenia.
Open
US stocks slid on Thursday as oil prices wavered following the announcement of a prospective deal between major oil-producing nations to cut production levels.
The S&P 500 market bellwether was down 0.2% at 2168.
The S&P 500’s energy sector had its biggest one-day gain since Jan. 14 on Wednesday.
But oil prices fluctuated Thursday, with the US benchmark West Texas Intermediate up 0.1% at $47.05 as analysts were cautious about the impact of the deal.
Members of the Organization of Petroleum Exporting Countries said they had proposed cutting their collective output to between 32.5mln and 33mln barrels a day, down from August levels of 33.2mln barrels a day. The group, however, deferred the task of completing a plan to make those cuts until November.
Some pundits see that as realistic, others as a delaying tactic that could unwind the deal.
One of the biggest risers on Wednesday was also the biggest early faller on Thursday on the S&P 500. Chesapeake Energy Corp (NYSE:CHK) was down 8.4% to $6.18, nearly wiping out the previous day’s gains.
The S&P Midcap 400 was down 0.2% at 1553 and led by, the appropriately named, Corrections Corporation of America (NYSE:CXW) down 4.5% at $13.94, while the S&P Smallcap 600 was down 0.3% at 755 and led by Stein Mart Inc (NASDAQ:SMRT) down 10.6% to $6.74.
Earlier, Stein Mart announced Dawn Robertson has tendered her resignation as Chief Executive. D. Hunt Hawkins, Stein Mart's President and Chief Operating Officer, has been named Interim CEO.
The company also issued a third quarter trading update and said that “Comparable store sales for the third quarter (which ends October 29, 2016) have decreased approximately 4 percent through September 27 compared to the same period last year. Sales results have improved somewhat in September after a challenging start and several missteps in August.”
Pre-Open
US stocks are seen falling at the open on Thursday after stellar gains led by the energy sector the previous session.
The S&P 500 market bellwether is indicated softer by 0.2%.
Buttressing their likely decline was data earlier which showed that the US economy grew at a slightly faster clip than previously estimated during the second quarter, fuelling hope that the momentum would continue into the third quarter.
The final reading of GDP showed the world’s largest economy expanded at an annualised pace of 1.4% in the three months to the end of June, up from the initial reading of 1.1% provided a month ago, the Commerce Department said on Thursday.
However, the print was way off the 2.6% growth that Wall Street economists had originally forecast.
A number of Fed regional Presidents will be speaking on Thursday, with chair Janet Yellen due to round things off at 1600 EDT.
Among stocks could come off sharply are those that punched the air with 10% or more gains at the Wednesday close. Among those indicated down are Murphy Oil (NYSE:MUR) by 9% off and Chesapeake Energy (NYSE:CHK) down 5% at around $6.40.
PepsiCo (NYSE:PEP) may add some pep to the market after it reported adjusted quarterly profit of $1.40 per share, eight cents above estimates, while revenue also exceeded forecasts. PepsiCo raised its full-year forecast as well, as demand for snacks and beverages increases. Pre-market it was indicated up 2.5% at $109.86.
Meanwhile, Transocean (NYSE:RIG) saw investor Carl Icahn cut his stake in the oilfield services provider to 1.5 percent from 5.9 percent, although Icahn did say he continues to have confidence in Transocean management. Icahn recently cut his stake in Chesapeake Energy as he scales down energy-related investments. Transocean was indicated down 1% at $9.92.
All traders could do with more accurate data feeds, right? Well Facebook (NASDAQ:FB) announced a partnership with the World Bank and the OECD on data collection aimed at giving broader and better insights into the global economy. Facebook shares were indicated up 0.05% at $129.30 – so just maybe it won’t change the world.