Saturday, April 20, 2024

Stocks open lower, pulled down by drops in energy companies

by Associated Press

Stocks are slipping in early trading on Wall Street Thursday, with energy stock taking the hardest hits as the price of oil falls back, despite a round of encouraging reports on the economy. The S&P 500 fell 0.5%. Small-company stocks fell more than the rest of the market. The Russell 2000 fell 1.2%, though it’s still beating other indexes so far this year. Bond yields fell slightly and the price of crude oil fell 3% following a big rally a day earlier. The drops came even as the government reported some encouraging news on the economy including a sharp decline in applications for unemployments benefits last week.

World shares were mixed on Thursday and U.S. futures edged higher ahead of the release of the latest unemployment figures.

Paris and Frankfurt declined while Tokyo’s Nikkei 225 index gained 1.1%. Chinese benchmarks stalled on concerns big companies like Alibaba and Tencent might lose their listings on U.S. exchanges.

Oil prices fell back after surging 6% on Wednesday on concerns over disruptions to shipping from a skyscraper-sized cargo ship wedged across Egypt’s Suez Canal.

Efforts continue to free the Ever Given, a Panama-flagged ship that carries cargo between Asia and Europe that ran aground Tuesday in the narrow, man-made canal dividing continental Africa from the Sinai Peninsula.

Germany’s DAX lost 0.2% to 14,590.11 and the CAC 40 in Paris gave up 0.3% to 5,929.03. Britain’s FTSE 100 gained 0.1% to 6,716.79. The futures for both the S&P 500 and the Dow industrials were up 0.3%.

The U.S. Securities and Exchange Commission said Wednesday it was adopting an interim rule that some foreign companies must provide documentation to show they are not owned or controlled by a government entity. The requirement mainly is expected to affect Chinese companies listed on U.S. exchanges and the SEC statement triggered selling of such companies in Hong Kong.

E-commerce giant Alibaba’s shares lost 3.9%; Tencent Holdings’ shed 2.8%; search engine company Baidu declined 8.6% and cell phone maker Xiaomi dropped 4.4%.

“Tech giants from Tencent and Alibaba hit the plunge pool after U.S. regulators rekindled threats to toss China’s most prominent corporations off U.S. bourses, compounding concerns of a widening domestic antitrust crackdown,” Stephen Innes of Axi said in a commentary.

The Nikkei climbed to 28,729.88 and the Hang Seng in Hong Kong shed 0.1% to 27,899.61. The Shanghai Composite index edged 0.1% lower to 3,363.59. South Korea’s Kospi picked up 0.4% to 3,008.33 and Sydney’s S&P/ASX 200 edged 0.2% higher, to 6,790.60.

India’s Sensex lost 1% and shares were higher in Taiwan and most of Southeast Asia apart from Jakarta.

On Wednesday, the S&P 500 gave up 0.5% to 3,889.14, its second loss in a row, while the tech-heavy Nasdaq dropped 2% to 12,961.89.

Technology and communication services companies accounted for the heaviest selling, outweighing gains in financial, energy and industrial stocks. Apple fell 2%, while Facebook lost 2.9%.

The Dow Jones Industrial Average slipped less than 0.1% to 32,420.06. afternoon, while the Russell 2000 index lost 2.4% to 2,134.27.

Investors are keeping an eye on efforts to combat the economic impact of the coronavirus pandemic. The Biden administration is considering up to $3 trillion in additional spending on infrastructure, green energy, and education.

Treasury Secretary Janet Yellen told the Senate she believes the U.S. government has more room to borrow, but said higher taxes would likely be required in the long run to finance future spending increases. That spooked some investors.

Meanwhile, Federal Reserve Chair Jerome Powell reiterated that a recent jump in the yield on the 10-year U.S. Treasury, which soared from less than 1% at the beginning of the year to 1.63% Thursday, was mostly a sign of confidence among investors that the economy is improving.

Benchmark U.S. crude oil lost $1.10 to $60.08 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard for pricing oil, lost $1.00 to $63.25 per barrel.

The U.S. dollar rose to 109.14 Japanese yen from 108.73 yen on Wednesday. The euro fell to $1.1808 from $1.1813.

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