US stocks closed lower on Monday, with the S&P 500 market bellwether slipping for the first time in four sessions and worries about a renewed oil glut doing the rounds.
Exactly a year since markets were last roiled by tumbling oil prices, a sell-off in crude prices took energy stocks with it as worries mounted that American drillers will be pumping oil more aggressively with crude prices sitting north of $50 a barrel. The US oil benchmark West Texas Intermediate was down 1.4% at $53.10. Any jump in oil output may unsettle the OPEC-Russia deal to cut back supply brokered last year and lead to a continued oil price depression.
The S&P 500 energy sector slipped on Monday by 1%, leading the decline on the benchmark index.
The S&P 500 itself ended down 0.2% at 2292 and oil stocks peppered the downside with Marathon Oil Corp (NYSE:MRO) down 4.2% to $16.50, Devon Energy Corp (NYSE:DVN) down 3.3% at $45.27, Transocean Inc (NYSE:RIG) down 3.1% at $13.54 and Chesapeake Energy Corp (NYSE:CHK) down 3% at $6.37.
The S&P Midcap 400 ended down 0.5% at 1699 with oil stocks among the fallers. Denbury Resources (NYSE:DNR) was down 3.7% at $3.41, Superior Energy Services (NYSE:SPN) down 4.2% at $17.69, and Sm Energy Co (NYSE:SM) down 3.6% at $28.74.
The S&P Smallcap 600, which was an outperformer among tickers last week, ended down more sharply by 0.9% at 833 and led by Atwood Oceanics (ATW) (NYSE:ATW) down 13.8% at $10.91 as the stock still reacted to Friday’s release of its earnings which missed estimates.
Early trading
US stocks opened weaker on Monday, as investors sought safer haven assets such as Treasuries in what appeared a risk-off trade.
The S&P 500 market bellwether was down 0.8% at 2295 while the Dow Jones Industrial Average was down 0.1% at 20,069 – at least clinging onto its hard-won 20,000 territory.
The tech-heavy Nasdaq Composite shed 0.1% to 5659.
The direction was also fuelled by growing anxieties that the surge in equities and riskier assets seen since the election of US President Donald Trump may well have run out of steam less than a month after his inauguration, according to analysts at Goldman Sachs.
Trump’s promise to ramp up spending and cut taxes in the world’s largest economy has been a boon for stocks, lifting the Dow Jones Industrial Average to 20,000 for the first time in history and sending the S&P 500 up 10% since his election in November on hopes for faster growth, rising inflation and swelling corporate profits.
But with the US’s economic recovery since the financial crisis already long-running, the scope for a major expansion in economic activity will be capped under the new White House administration, says Jan Hatzius at Goldman, who thinks the sentiment spike may well have peaked.
Game board kind Hasbro Inc (NASDAQ:HAS), the maker of iconic real estate board game "Monopoly" led the gainers on the S&P 500, up 14.8% to $94.87 after it unveiled quarterly results that easily beat Wall Street estimates and lifted its dividend.
But the laggards were in charge and the top decliner was plastics maker Newell Rubbermaid Inc (NYSE:NWL) down 5.8% to $44.18. It reported fourth quarter earnings which were in line with expectations – but sales were below forecast.
The S&P Midcap 400 was down 0.02% at 1706 and led by Comscore Inc (NASDAQ:SCOR) down 22.1% to $25.26 after the business services group announced it had notified the Nasdaq Hearings Panel that the company will be unable to regain compliance with its Securities and Exchange Act periodic reporting requirements by the February 23, 2017 deadline set by the Panel.
The S&P Smallcap 600 dropped by 0.4% to 837 and led by LGI Homes Inc (NASDAQ:LGIH) down 13.1% to $27.25 after the real estate developer was downgraded by Wells Fargo to ” Underperform”. Earlier the firm had a rating of “Market Perform ” on the company shares. Wells Fargo advised their Clients and Investors in a research report released on Feb 6.
Pre-Open
US shares are expected to open the week softer after President Donald Trump was locked in a legal dispute over his executive order banning immigration from seven mostly-Muslim nations.
Restoring Trump's ban would "unleash chaos again", lawyers for two US states argued.
Counsel for Washington and Minnesota urged a federal appeals court in San Francisco to maintain its nationwide temporary restraining order. They are being backed by technology firms which say the travel ban is harmful to their businesses.
Trump administration lawyers are expected to respond later on Monday.
The market bellwether S&P 500 is indicated down 0.2%, the tech-heavy Nasdaq Composite down 0.2% and the Dow Jones Industrial Average 0.2% lower on Monday.
Tiffany (NYSE:TIF) shares fell out of fashion on Monday after its chief executive abruptly exited after leaving the upscale jeweler’s board “disappointed by recent financial results”.
Frederic Cumenal, who had led the New York-based group since April 2015, will be replaced with immediate effect by board chairman and former CEO Michael Kowalski who will serve as interim chief as the group seeks a permanent replacement.
The news, which was disclosed on Sunday not long before the kick-off of the Super Bowl that featured a Tiffany ad featuring Lady Gaga prominently at halftime, sent shares sliding 3.1% to $78.01 pre-market.
The troubled airbag maker Takata (OTC:TKTDY) is considering potential bidders following its deadly airbag recall.
Detroit-based company Key Safety Systems is a frontrunner for a deal.
An independent committee set up by the troubled Japanese firm recommended Key Safety Systems, Takata said in a statement over the weekend. It added that a final decision hasn't been made yet.
Key Safety Systems is the fourth-largest airbag maker in the world. Buying Takata would make it the second-largest, according to Valient Market Research.
Shares in Takata fell by 19% in Tokyo on Monday.
On the flipside, shares in Hasbro (NASDAQ:HAS), the toymaker behind the board game Monopoly, rallied early on Monday after it unveiled quarterly results that easily beat Wall Street estimates and lifted its dividend.
The group said its fourth-quarter sales climbed by 11 per cent to $1.63bn, zipping past analyst forecasts of $1.5bn. Net profits rose to $192.7mln, or $1.52 per share, from $175.8mln, or $1.39 per share in the same three-month period in 2015.
Hasbo shares were up 12.5% at $92.94 pre-market.