Stocks Slide as Crude Oil Is Pushed Lower

Stocks remain lower in the early afternoon Thursday after a greater-than-expected increase in crude supplies pushes oil prices lower.
By Keris Alison Lahiff ,

Stocks remained lower in the early afternoon Thursday after a greater-than-expected increase in crude supplies pushed oil prices lower. 

The S&P 500 was down 0.92%, the Dow Jones Industrial Average fell 1.1%, and the Nasdaq slid 0.65%.

Crude stocks in the U.S. climbed at a rate of 4.2 million barrels over the week ended Nov. 6, according to a recent check by the Department of Energy. Analysts had expected inventories to rise by 2.9 million barrels. Prices have been under pressure for a year as weakening global demand exacerbates continued oversupply. West Texas Intermediate crude dropped 2.4% to $41.90 a barrel on Thursday. 

Weaker crude oil prices hit the energy sector hard. Major oilers including Exxon Mobil (XOM) - Get Report , Chevron (CVX) - Get Report , Royal Dutch Shell (RDS.A) , BP (BP) - Get Report , Total (TOT) - Get Report and Schlumberger (SLB) - Get Report were all lower, while the Energy Select Sector SPDR ETF (XLE) - Get Report dropped 1.8%. 

A series of speeches from Federal Reserve members highlighted a more hawkish tone on monetary policy. St. Louis Fed President James Bullard, for example, argued for a rate hike during one of the many Fed speeches scheduled throughout the day.

"While the [Fed's] goals have been met, the policy settings remain as extreme as they have been at any time since the recession ended in 2009," Bullard told an audience at the Cato monetary policy conference in Washington. "There is no reason to continue to experiment with extreme policy settings."

Richmond Fed President Jeffrey Lacker also appeared to back a rate hike, noting that the Fed could still influence inflation regardless of a weak "Phillips Curve." Economists have argued recently that the relationship between lower unemployment and higher inflation, the Phillips Curve, had broken down and that the central bank should wait for higher wages before hiking rates.

"On the whole, Fed speakers so far have stuck to the script, leaving traders little reason to adjust their "likely but not inevitable" expectation for a December rate hike," Matt Weller, senior market analyst at Forex.com, wrote in a note.

Investors have been cautious as they await further clues as to when the Fed could hike interest rates for the first time in nearly a decade. The odds are greater on a December rate hike after a stellar October jobs report supported the case for tighter monetary policy.

Financials stocks were the worst performers Thursday as a December rate hike appeared more likely. Major banks Bankof America (BAC) - Get Report , Citigroup (C) - Get Report , Goldman Sachs (GS) - Get Report and Barclays (BCS) - Get Report were lower, while the Financial Select Sector SPDR ETF (XLF) - Get Report dropped 1%.

Weekly jobless claims in the U.S. remained flat at 276,000 in the week ended Nov. 7, according to the Labor Department. The number of new claims for unemployment benefits was expected to fall to 270,000. However, the measure remained near 15-year lows in another sign of a tightening labor market.

Stocks fell on Wednesday as a troubled retail sector gave the market little reason to move higher. Macy's (M) - Get Reportsuffered its worst daily performance in eight years after reporting its third straight quarter of declining sales. J.C. Penney (JCP) - Get Report also moved lower ahead of its earnings report on Friday.

Fellow retailer Kohl's (KSS) - Get Report did manage to report a strong quarter, driven by better-than-expected back-to-school sales and a rebound in traffic in October. The company earned 75 cents a share, 6 cents above estimates, while revenue climbed 1% to $4.43 billion and beat forecasts. Shares climbed 6% on Thursday.

Angie's List (ANGI) - Get Report spiked 11% after receiving an acquisition offer from InterActiveCorp (IACI) worth $512 million, a 10% premium to the company's Wednesday close. InterActive said it would consider combining the home services search engine with its HomeAdvisor business.

PayPal (PYPL) - Get Report fell more than 2% on reports Apple (AAPL) - Get Report is exploring a rival mobile payments service tied back to its Apple Pay platform. The tech giant is reportedly in talks with JPMorgan and Wells Fargo to set up the service, according to The Wall Street Journal. A 2016 launch date is expected.

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