Stocks trade in tight range as oil keeps sliding
U.S. stocks traded in a narrow range Thursday, following the prior day’s massive intraday reversal as low oil prices continued to weigh.
With the Dow up about 50 points, the major averages gave up most of their opening gains to trade little changed to slightly lower.
“It looks like the tone of the day has changed. … Crude’s having trouble today,” said JJ Kinahan, chief strategist at TD Ameritrade.
WTI was off more than 3 percent just above $31 a barrel in morning trade ET. Treasury yields edged lower and the VIX held near 21.
The Nasdaq composite briefly turned lower in morning trade as declines in Apple and other major tech stocks weighed.
The S&P 500 struggled to hold initial gains, trading about a point higher or lower as energy weighed on the index, while telecommunications and financials led advancers.
“I think it’s profit taking. I think we’re at a little bit of an inflection point here, looking for a new catalyst,” said Tom Wright, director of equities at JMP Securities, noting that driver could come from some announcements of major corporate deals.
“When energy stocks found some stability, the financials got really soft and that was a concern,” he said. “The financials are OK since then and we’d like to see a much bigger bounce in the financials to gain more confidence.”
“From a fundamental standpoint the market’s in a wait and see mode and to a large extent remains at the mercy of oil,” said Adam Sarhan, CEO of Sarhan Capital. “As goes oil, so goes the other risk assets.”
Also weighing on sentiment was the overnight 6.4 percent plunge in the Shanghai composite, while the Hang Seng lost nearly 1.6 percent. In contrast, Japan’s Nikkei 225 rose 1.4 percent.
Treasury yields held lower, with the 2-year yield at 0.72 percent and the 10-year yield at 1.72 percent.
The U.S. dollar index traded a touch higher, with the euro at $1.10 and the yen at 112.63 yen against the greenback.
European stocks held more than 2 percent higher. The STOXX Europe 600 Banks outperformed, briefly trading more than 4 percent higher but still more than 30 percent below its 52-week intraday high.
U.S. stock index futures held mostly higher after January orders for durable goods jumped 4.9 percent, topping expectations with the largest increase since March and reversing December’s revised 4.6 percent plunge. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 3.9 percent after tumbling by a revised 3.7 percent in December, Reuters said.
“Favorable technicals and incrementally positive news should lend to perhaps a higher trend today,” said Jack Ablin, chief investment officer at BMO Private Bank.
The major U.S. averages staged a massive reversal Wednesday to close higher as some stabilization in oil prices offset declines in financials. The sector, which is the worst performer in the S&P 500 for the year so far, was among the top index advancers in morning trade Thursday.
St. Louis Fed President James Bullard, a voting member of the Fed, said on CNBC’s “Squawk Box” that he’s not too concerned about a global recession but he does see a “lower trend growth rate.”
Separately, Bullard late Wednesday reiterated his opposition to further interest rate hikes given that U.S. inflation expectations have fallen and threaten the U.S. central bank’s credibility.
Atlanta Fed President Dennis Lockhart reiterated Fed policy for rate hikes remains data dependent, according to StreetAccount.
San Francisco Fed President John Williams is scheduled to give his outlook on the economy at 12 p.m.
On Wednesday, the Dow Jones industrial average reclaimed a 266-point drop — its largest recovery of losses by points since 2008 — and then went on to close up 53 points. The S&P 500 erased intraday losses of more than 1 percent for the third time in 2016 and closed up 0.4 percent.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 21.
About three stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 46 million and a composite volume of 116 million.
U.S. crude oil futures for April delivery fell 12 cents to $32.03 a barrel on the New York Mercantile Exchange.
Gold futures declined $10.20 to $1,228.90 an ounce as of 9:34 a.m. ET.