US stocks closed mixed on Thursday, with the stand-out record-breaker the Dow Jones Industrial Average as oil prices rallied.
The trio of major tickers all managed to mark intraday record highs, before falling back. All except the DJIA that is. The Dow managed to hit 20,840.70 and still ended up 0.2% at 20,810.
The S&P 500 hit an intraday record of 2,368.26 before ending flat at 2363. The tech-heavy Nasdaq Composite, however, had the roughest of rides, marking a record high daytime of 5,866.96 but then spending the entire session below water and closing down 0.4% at 5835.
Oil was the main factor in town this session, with the US barometer West Texas Intermediate up 1.4% at $54.35. The S&P Energy sector was also one of the better-performing sectors and jumped 0.5%, out in front of lacklustre financials which barely gained after running the roost of Wall Street in recent days over prospects for a possible March Fed rate hike.
Among the big energy sector movers were Transocean Inc (NYSE:RIG) up 7.8% at $14.31 and Murphy Oil Corp (NYSE:MUR) up 2.4% to $28.40.
Transocean was also the third-biggest riser overall in the S&P 500. But the top position remained stubbornly all day with the stock which fell the most in the previous session, First Solar Inc (NASDAQ:FSLR), up 10.9% at $37.24.
Official weekly oil inventories data spurred on a market already chuffed by a report from the American Petroleum Institute. The official Energy Information Administration data showed US crude oil stocks rose by only half a million barrels last week, versus a forecast 3.5mln and well down from 9.5mln a week ago.
But the data also showed US crude oil exports have surpassed 1mln barrels per day for the second week in a row, a remarkable rise in volumes just a year after the country lifted restrictions on foreign sales of the commodity.
The US exported 1.2mln barrels of crude in the week ended February 17, hitting a new record, the EIA estimated.
But there were also some dark clouds around the sector on Thursday. A growing glut of liquefied natural gas will create a “price war” between the US and Russia that could drive UK prices below those in North America, Vitol’s head of LNG said on Thursday.
Pablo Galante Escobar, a former oil trader who runs the LNG unit at the world’s biggest independent energy trader, said growing exports of US shale gas would soon force Russia to slash prices to remain competitive in its main market.
The S&P Midcap 400 ended down 0.5% at 1734 and led by broadcasting and telecoms group Arris Group Inc (NASDAQ:ARRS), down 14.5% at $26.26 despite announcing its fourth quarter earnings which beat estimates.
The S&P Smallcap 600 closed down 0.7% at 853 and led by chemicals group Tredegar Corp (NYSE:TG), down 14.2% to $19.40 a day after reporting its fourth-quarter earnings and declaring its dividend.
Early trading
US stocks opened mixed on Thursday, but the Dow, expected to underperform other major indices, was the only one to mark a fresh record high as oil data buoyed energy stocks.
The Dow Jones Industrial Average was up 0.2% at 20,816 – eyeing the 21,000 mark – having it an intraday record high of 20,824.22 at the opening. Or should that rad topening?
The toppy Dow was expected to limp 0.1% higher this session, but it has now made it a tenth session of record advances.
Meanwhile, the S&P 500 and Nasdaq Composite, expected to catch up with gains as much as 0.7%, were nowhere to be seen. The Nasdaq opened slightly higher but slumped and was last down 0.2% at 5851, while the S&P 500 market bellwether opened just 0.3% higher and then fell back to be up 0.1% higher at 2,365.
Mind you, it wasn’t all bad news for the S&P 500. Although paring gains, it did mark a fresh intraday high of 2,368.26 soon after opening.
In stock news, Chesapeake Energy (NYSE:CHK), the second-largest gas producer in the US, reported a sharp reduction in its losses in 2016, and reiterated its plans to step up activity this year.
Its loss per share was 84 cents for the fourth quarter of last year, down from a loss of $3.36 in the equivalent period of 2015.
The improvement came even though revenues for the period were down 24% at $2.02bn.
Chesapeake shares were up 1.7% at $6.02.
It was anyway a good day for energy stocks, with the West Texas Intermediate up 2% at $54.64. The US oil benchmark was buoyant less than an hour to go before the release of this week’s US oil inventories by the EIA. Crude oil stocks are expected to be a rise of 3.475mln barrels versus a gain of 9.5mln last week. The numbers are released at 1100 ET (1600 GMT).
Oil prices were higher because of unofficial industry data that powered the energy market.
Oil prices were up by the most in almost a month after a report from an industry group showed a surprise drop in US crude stocks and as investors awaited the official numbers from the Energy Information Administration. The American Petroleum Institute showed that weekly crude supplies fell by 884,000 barrels and gasoline stocks fell by 893,000 barrels.
Apart from a Who’s Who of oil stocks gaining on the S&P 500, the top gainer was Wednesday’s biggest faller. First Solar Inc (NASDAQ:FSLR) demonstrated that a day can be a long time in markets. The stock was up 7.6% at $36.15.
The S&P Midcap 400 was down 0.1% at 1740 while the S&P Smallcap 600 was down 0.3% at 856, demonstrating that the gains were concentrated in top-flight stocks.
Data was also showing some cause for concern, and this might well be what smaller stocks were focused upon. The Chicago Fed National Activity Index fell 0.05 in January. It had been expected to slow to a gain of 0.10 from 0.18 gain in December.
Pre-Open
US shares were expected to storm higher on Thursday, all except the Dow Jones Industrial Average which is likely to limp after posting another record peak the previous session as the Trump Administration talked up tax reform before August and super-long dated debt issuance.
Wednesday was the Dow’s ninth session in a row for record highs and its best such period since 1987.
But on Thursday S&P 500, expected up 0.7% - one of its best gains in over a year if borne out – and the Nasdaq Composite up 0.6%, were playing catch-up to forecasts of a 0.1% gain by the Dow.
Still, for the Dow that just may be enough to register a tenth successive session of record highs.
The previous session had seen S&P 500 and Nasdaq wobble, on account of worries that the Federal Reserve may hike rates as soon as next month. The Dow, populated with a few bank stocks that will gain for such a hike, it was a happier matter.
Markets had their first taste of how the Trump Administration is thinking about its planned infrastructure spending. The new US Treasury secretary Steve Mnuchin said on Thursday that the US would consider the idea of selling debt at longer maturities than the hitherto ultra-long 30 years T-Bonds, calling the concept a “serious issue”.
Speaking in an interview on CNBC, Mnuchin said staff at the Treasury will explore the idea of launching bonds with maturities of 50 – 100 years, but that it had not yet made a formal decision on the matter.
It could spell an attempt to push bond supply out to a century but that would also drive up yields at the long end of the curve, including the all-important ones in the 30-year space which price property mortgages.
The US has always been suspicious of super-long debt issuance but that hasn’t stopped the corporate world dabbling in it if not the US government. Ford Motors (NYSE:M) is one such company that has issued up to 100-year debt in the past 50 years. But even before the 2007 financial crisis, back in 2005, both Ford and General Motors (NYSE:GM) were downgraded to junk status by Standard & Poor’s.
Mnuchin also said on Thursday that the Trump administration is committed to passing a “very significant” tax reform plan by the Congressional recess in August.
Mnuchin added he still expects the administration’s plans for a tax overhaul coupled with a curb on regulations to be able to boost the US economic growth pace to 3% “or more”, potentially as soon as next year. The world’s biggest economy grew by 1.6% in 2016.
In stock news, shares in the parent company of Victoria's Secret and Bath & Body Works, L Brands (NYSE:LB), plunged 12.5% to $50.86 pre-market after the company reported a disastrous first quarter outlook along with its full-year earnings overnight.
LB offered a very weak Q1 and full-year outlook. For the first quarter, it sees EPS of just $0.20 to $0.25, which is about half the $0.49 that analysts are looking for. For 2017 in total, its EPS forecast of $3.05 to $3.35 is also well below analysts’ $3.69 view.
Shares in Tesla (NASDAQ:TSLA) were down 2% at $267.81 pre-market despite releasing well-received quarterly results overnight. The automaker posted a loss of $121.3mln for the quarter, an improvement over the same period last year.
Tesla stock has surged 30% this year based on investor optimism over the launch of the Model 3, its first mass marmass-market