S&P 500, Dow Barely Beat Records in Little-Changed Session
Wall Street's big three-day rally lost steam on Wednesday with bulls given little reason to continue charging much higher.
The S&P 500 was up slightly, adding 0.01%. The Dow Jones Industrial Average rose 0.13% and the Nasdaq declined 0.34%.
Stocks had extended a rally into day three on Tuesday, pushing the S&P 500 and Dow to clinch new record closing highs. The S&P 500 secured a record close of 2,152.14, its second day of record closes. The Dow climbed to 18,347.67, breaking a previous all-time record from May last year
Crude oil kept markets under pressure on Wednesday after erasing massive gains achieved over the previous session. Commodities were in decline after a weekly read on inventories showed a smaller-than-expected decline. The Energy Information Administration reported a 2.5-million-barrel decline in stocks, weaker than an expected drop of 3.25 million barrels.
The International Energy Agency warned in its monthly report that ballooning inventories could threaten the "recent stability of prices." Output in the Middle East has risen, while production in the U.S. has shrunk, creating a short-term balance in supply.
West Texas Intermediate crude oil closed 3.85% lower at $45 a barrel on Wednesday.
The energy sector was the biggest drag on Wall Street Wednesday. Major oilers including Exxon Mobil (XOM) - Get Report , Chevron (CVX) - Get Report , Halliburton (HAL) - Get Report and ConocoPhillips (COP) - Get Report were all lower, while the Energy Select Sector SPDR ETF (XLE) - Get Report slid 1%.
Activity in the 12 Federal Reserve districts grew at a "modest pace," according to the latest "Beige Book." The anecdotal reading on economic conditions throughout the country reported "modest to moderate" wage pressures. Manufacturing activity also "generally improved" after a rough start to the year. The release covered information collected over the six weeks from mid-May to the end of June.
Import prices climbed just 0.2% in June, below an expected 0.5% increase and well below May's 1.4% growth. Import prices excluding fuel dropped 0.3%, according to the Bureau of Labor Statistics. Export prices rose 0.8%, in line with estimates.
The outcome of the United Kingdom's vote to exit the European Union has increased uncertainty over the U.S. economic outlook, Cleveland Fed President Loretta Mester said on Tuesday. Mester also noted the Fed has the ability to pause before determining the next interest-rate move.
"I do not think U.S. monetary policy is behind the curve yet" so it was right for the Fed to hold rates steady in June, Mester said in a speech on the economic outlook at the Australian Business Economists Luncheon in Sydney. "I expect we will be living with uncertainty for a while as the U.K. and Europe establish the terms of their new relationship."
The chances of a rate hike this year have been greatly diminished by recent rough patches in economic data and the uncertainty surrounding the Brexit. However, a stronger-than-expected U.S. jobs report in June reintroduced the possibility of a rate hike later in 2016.
Tesla (TSLA) - Get Report fell nearly 1% after confirming that it had discontinued its guarantee of a resale value for its Model S vehicles. The automaker said it had retired the program to "keep interest rates as low as possible." The program guaranteed certain Model S buyers a minimum resale price after three years.
Michaels (MIK) - Get Report tumbled by 6% after announcing a secondary offering of 11 million shares, 1 million of which it plans to repurchase. The arts and crafts retailer also said it expects second-quarter earnings no higher than 18 cents a share, weaker than consensus.
Juno Therapeutics (JUNO) roared higher by 9.5% on Wednesday after the Food and Drug Administration removed a clinical hold on its Phase 2 trial of a drug for leukemia. The biotech company had slumped last week after the FDA put a hold on the trial after the death of two patients undergoing the treatment.