Stocks struggle as oil prices fluctuate
Stocks traded mostly lower on Tuesday as U.S. oil prices wavered and investors looked ahead to Fed Chair Janet Yellen’s testimony.
“It’s the oil tail wagging the market dog,” said Art Hogan, chief market strategist at Wunderlich Securities.
WTI futures slipped 0.11 percent, or 2 cents, to trade at $29.67 a barrel in choppy trading. Earlier, oil prices fell about 1 percent as investors digested news that the International Energy Agency said that demand for oil will “ease back considerably” in 2016, before turning positive.
The Dow held about 50 points lower. The S&P 500 and Nasdaq were little changed.
“What this suggests is a near-term bounce,” said Adam Sarhan, CEO of Sarhan Capital. “I think yesterday was a small but substantial change in the near-term trend.”
Earlier, stocks were weighed down by rising global growth fears and a weak overseas backdrop.
“Japan fell 5.4 percent largely in part [because] two of its biggest banks fell 9 percent,” said Peter Boockvar, chief market analyst at The Lindsey Group. “People thought it we’d have a quiet week because China was closed; that’s obviously not the case.”
European equities followed Asian stocks lower, with the pan-European STOXX 600 index dropping over 1 percent.
U.S. futures seesawed on Tuesday, with Dow futures failing to hold initial gains and dropping more than 150 points.
“We certainly know the path of least resistance is lower,” said Art Hogan, chief market strategist at Wunderlich Securities.
“At the beginning of this sell-off, it was about oil and China demand,” he said. ” Now we’re seeing a re-writing of valuations in other spaces, like tech.”
The technology sector in the S&P has dropped more than 4.5 percent in the last month.
The three major U.S. indexes fell on Monday but managed to pare losses ahead of the close.
Treasurys around the world have staged a significant rally recently and continued their upward trajectory on Tuesday.
“The bond market is flashing a recession,” Peter Cardillo, chief market economist at First Standard Financial, said.
U.S. 10-year yields fell to trade at 1.70 percent, after briefly dipping below that level. In Japan, 10-year yields turned negative for the first time ever.
On the data front, investors digested U.S. wholesale inventories data, which showed inventoried declined 0.1 percent in December, less than expected.
Coca-Cola, Viacom and Wendy’s reported quarterly earnings before the open, with Disney results due after the bell.
“We got earnings that were good, but not good enough to move us higher,” Wunderlich’s Hogan said.