U.S. stocks have shed an early gain and are mostly lower Wednesday afternoon as energy companies sink along with crude oil prices. Investors are selling big dividend payers as bond yields rise, and a sharp drop in IBM sent the Dow Jones industrial average down.
KEEPING SCORE: The Standard & Poor’s 500 index lost 3 points, or 0.1 percent, to 2,339 as of 3:15 p.m. Eastern time. It rose as much as 10 points, or 0.4 percent, earlier on. The Dow lost 114 points, or 0.6 percent, to 20,409. Half of the blue-chip index’s losses came from IBM. The Nasdaq composite rose 18 points, or 0.3 percent, to 5,867 as health care companies climbed. The Russell 2000 index of small-company stocks added 7 points, or 0.5 percent, to 1,368 after a late gain a day earlier.
Stocks gave up an early gain as the day wore on. The market turned a bit lower after the Federal Reserve released its ”Beige Book” survey of economic conditions at 2 p.m. Eastern. The Fed said the economy kept growing this spring and the labor market was still tight, but growth in pay for workers remains modest.
BEIGE OUT: The Fed said economic growth was ”modest or moderate” from mid-March into early April along and wage growth for some workers improved. But investors have been wondering when wage growth will pick up for more people.
Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management, said faster wage growth will show up eventually even if monthly and quarterly reports are uneven. As wages rise and people spend more money, he thinks the economy will keep growing. ”The consumer is in a very good place from a debt-to-asset standpoint,” he said, after reducing debt in recent years. ”When they get wage increases, they’re more likely to spend those in the future than to save them.”
Schutte said that will ultimately help the stock market more than any of President Donald Trump’s proposed pro-growth policies would.
OIL: Oil prices dropped after the Energy Information Administration said U.S. crude inventories didn’t shrink as much as investors hoped they would, and the EIA says the stockpiles are larger than normal for this time of year. Benchmark U.S. crude lost $1.97, or 3.8 percent, to $50.44 a barrel in New York. Brent crude, used to price international oils, fell $1.96, or 3.6 percent, to $52.93 per barrel in London.
Energy companies skidded. Chevron $1.71, or 1.6 percent, to $103.97 and Marathon Oil sank 65 cents, or 4.2 percent, to $15.09.
HIGH-TECH TROUBLE: Technology and consulting company IBM slumped after a weak sales report. The company reported $18.16 billion in revenue in the first quarter, and according to FactSet, that was more than $200 million below analysts’ estimates. IBM stock fell $8.57, or 5 percent, to $161.48.
BONDS: Bond prices fell, reversing most of their gains from a day earlier. The yield on the 10-year Treasury note rose to 2.21 percent from 2.17 percent. That hurt high-dividend payers including utilities and household goods companies. Public Service Enterprise Group shed 92 cents, or 2 percent, to $44.42 and beauty products retailer Coty surrendered 35 cents, or 1.9 percent, to $18.06.
SHIFT INTO DRIVE: Sellers of cars, auto parts, tires and rental cars climbed after a strong quarter from Genuine Parts. The auto and industrial parts distributor raised its profit forecast for the year, although it acknowledged its U.S. business has been weak. Those stocks plunged earlier this month after automakers reported disappointing March sales, and some investors felt that was a warning sign about spending by consumers.
Genuine Parts jumped $2.09, or 2.3 percent, to $92.2.
BANK COMEBACK: Wealth management and investment banking firm Morgan Stanley said its profit jumped in the first quarter as its stock and bond trading businesses made about twice as much money as they did one year ago. That continued what’s mostly been a strong first quarter for banks and financial companies. Despite disappointing results from Goldman Sachs Tuesday morning, most have said their trading units did well, and they’re also benefiting from higher interest rates. Morgan Stanley gained $1.06, or 2.6 percent, to $42.28.
ROBOT ROLL CALL: Robotic surgery system maker Intuitive Surgical climbed after its profit and revenue came out ahead of analysts’ projections. The company said shipments of its da Vinci device and surgeries performed with it both jumped. The stock rose $51.65, or 6.8 percent, to $810.99 and it helped health care companies climb higher.
OTHER ENERGY TRADING: Wholesale gasoline fell 5 cents, or 3 percent, to $1.66 a gallon. Heating oil lost 4 cents, or 2.5 percent, to $1.58 a gallon. Natural gas rose 4 cents to $3.19 per 1,000 cubic feet.
METALS: The price of gold, which has climbed steadily in recent weeks, fell $10.70 to $1,283.40 an ounce. Silver lost 11 cents to $18.16 an ounce. Copper added 1 cent to $2.53 a pound.
CURRENCIES: The dollar rose to 108.70 yen from 108.42 yen. The euro edged down to $1.0721 from $1.0730.
OVERSEAS: British stocks continued to fall. The FTSE 100 slid 0.5 percent after a 2.5-percent plunge on Tuesday. Other major European indexes recovered modestly. In France the CAC-40 gained 0.3 percent and Germany’s DAX edged up 0.1 percent. In Japan the Nikkei 225 edged up 0.1 percent and the South Korean Kospi shed 0.5 percent. Hong Kong’s Hang Seng index fell 0.4 percent.