Stocks Close Mostly Lower Thursday 05/24 15:40
U.S. stocks finished mostly lower Thursday as energy companies skidded along
with oil prices.
NEW YORK (AP) -- U.S. stocks finished mostly lower Thursday as energy
companies skidded along with oil prices. The market dropped after President
Donald Trump said he canceled a meeting with North Korean leader Kim Jong Un,
but recovered most of those losses.
Crude oil futures and energy companies fell as investors reacted to reports
that OPEC nations may start producing more oil. Banks fell as interest rates
edged lower, and car companies including Fiat Chrysler and Toyota dropped as
the Trump administration considered tariffs on imported cars and car parts, a
move that was criticized by the governments of China, Japan and the European
The Dow Jones industrial average fell as much as 280 points in the morning,
more than 1 percent, after Trump said the June meeting with Kim was off. In a
letter, Trump said he was canceling the summit because of "tremendous anger and
open hostility" in a recent statement by a North Korean official. Technology
companies, which have led the market in recent years, took some of the biggest
losses and defense contractors climbed.
The market gradually recovered those losses, and Trump later told reporters
that the meeting could still happen in June or later on. Stocks finished only
slightly lower than where they were before Trump's initial announcement.
Chris Zaccarelli, chief investment officer for the Independent Advisor
Alliance, said investors were troubled at first by Trump and Kim's statements
about a possible nuclear war, but they've gotten used to it, which means the
market doesn't react as much to their statements.
"The first time the market hears these threats there's a large reaction and
after that there's less reaction," he said. "It's just rhetoric right now and
there's no actual military conflict, (so) these moves are kind of short-lived."
The S&P 500 index dropped 5.53 points, or 0.2 percent, to 2,727.26. The Dow
Jones industrial average lost 75.05 points, or 0.3 percent, to 24,811.76. The
Nasdaq composite dipped 1.53 points, less than 0.1 percent, to 7,424.43. The
Russell 2000 index of smaller-company stocks edged up 0.61 points to 1,628.22.
Benchmark U.S. crude lost 1.6 percent to $70.71 per barrel in New York.
Brent crude, used to price international oils, fell 1.3 percent to $78.79 a
barrel in London.
Various news outlets reported that the nations of the OPEC cartel might
start producing more oil in response to reduced exports from Venezuela and
Iran. Greater supplies would send prices lower. Energy companies have slipped
in recent days as investors anticipated that possibility. On Thursday Exxon
Mobil lost 2.3 percent to $80.27 and Chevron dipped 1.6 percent to $126.61.
OPEC and a group of other major oil producers cut production last year in
response to a steep drop in oil prices. U.S. crude had fallen from more than
$100 a barrel in mid-2014 to as little as $26 a barrel in early 2016. On Monday
U.S. crude peaked at $72.24 a barrel, its highest price since late 2014.
The two sides agreed in March after Trump and Kim traded public insults and
threats for months.
Still, defense companies fared better than the rest of the market. Raytheon
rose 1.3 percent to $213.94 and Northrop Grumman gained 1.4 percent to $332.81.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.97
percent from 2.99 percent, and banks traded lower. Metals prices also increased
as the dollar weakened. Gold gained 1.1 percent to $1,304.40 an ounce and
silver jumped 1.7 percent to $16.69 an ounce. Copper picked up 0.8 percent to
$3.10 a pound.
The Trump administration plans to conduct an investigation into imported
vehicles and automotive parts on national security grounds. A European Union
official said the proposal would violate World Trade Organization rules and
Japan and China also criticized the proposal. Those same grounds are the
justification for proposed tariffs on imported aluminum and steel, and the U.S.
will decide by June 1 whether to impose tariffs on steel and aluminum from
Fiat Chrysler lost 0.9 percent to $22.26 and Tata Motors fell 5.8 percent to
$21.09. Toyota shares fell 1.8 percent to $132.44. U.S. rivals Ford rose 1.6
percent to $11.62 and General Motors added 1.4 percent to $38.39.
"I'm hoping that what they're doing is trying to put a little pressure on
the NAFTA negotiations and this will be a way to get Mexico and Canada to
agree," said Zaccarelli, of the Independent Advisor Alliance.
In other energy trading, wholesale gasoline fell 1.2 percent to $2.23 a
gallon and heating oil lost 1 percent to $2.27 a gallon. Natural gas rose 0.9
percent to $2.94 per 1,000 cubic feet.
The dollar fell to 109.28 yen from 110.07 yen. The euro rose to $1.1727 from
Germany's DAX lost 0.9 percent and the FTSE 100 in Britain fell 0.9 percent
as well. The CAC 40 in France shed 0.3 percent. Japan's Nikkei 225 index fell
1.1 percent and the Kospi in South Korea slipped 0.2 percent. In Hong Kong, the
Hang Seng gained 0.3 percent.