US equities fell Wednesday and domestic oil snapped its 12-day losing streak, the longest on record.
The S&P 500 (^GSPC) slipped 0.75%, or 20.36 points as of market close, posting a fifth consecutive day of declines. The Dow (^DJI) fell 0.81%, or 205.25 points, paring some losses after shedding more than 350 points at its intraday lows. The Nasdaq (^IXIC) declined 0.9%, or 64.48 points.
With 2018 coming to a close, analysts have begun turning their attention to next year’s outlook. In November, 44% of fund managers said they think global economic growth with decelerate in the next 12 months, according to a Bank of America Merrill Lynch survey of global fund managers.
Analysts at UBS downwardly revised their 2018 year-end price target for the S&P 500 to 2,875 from 3,1750. For the year-end of 2019, the analysts target 3,200 for the S&P 500 on 7% EPS growth and a rise in the price-to-earnings ratio, “in line with history after de-ratings,” they said. “No further trade escalation, solid but slowing growth and moderately higher rates underpin our view.”
Investors continue to focus on energy, with oil prices snapping a 12-day record losing streak on Wednesday. West Texas intermediate (CL=F) settled higher by 1.01% to $56.25 per barrel. Prices for Brent crude (BZ=F), the international benchmark, rose 1.02% to $66.14 per barrel.
The upticks in oil prices follow reports that OPEC and its partners are considering cutting output by 1.4 million barrels per day in 2019, a larger reduction than previously anticipated to offset concerns of a global supply glut.
Yesterday, US crude oil had settled lower by nearly 7%, its worst day in three years.
“What began as a cross-asset risk-off sell-off accelerated last week for oil on news of the Iranian waivers and is now being further exacerbated by systematic trading and hedging strategies,” Goldman Sachs analyst Jeffrey Currie wrote in a note Tuesday. “Driving the most recent leg of the oil sell-off has instead first been momentum trading strategies and second, increased selling of crude oil futures by swap dealers as they manage the risk incurred from existing producer hedging programs in a falling price environment.”
Natural gas (NG=F) prices jumped as cold weather begins to settle in for many parts of the US. Natural gas settled at $4.84 per gallon, up nearly 18%.
ECONOMY: CPI rises at expected pace in October
The US Consumer Price Index rose 0.3% month-over-month in October and 2.5% over last year, matching consensus estimates. CPI rose at a faster pace than in September, when headline CPI grew 0.1% month-over-month. Higher prices in gasoline, used autos and housing contributed to the increase, the US Department of Labor reported Wednesday.
Core CPI excluding the volatile food and energy categories increased 0.2% month-over-month, also in line with estimates, while coming in slightly lower-than-expected for year-over-year growth at 2.1%.
“The rebound in headline CPI inflation to 2.5% in October, from 2.3%, was mostly driven by a rise in gasoline prices that will be more than reversed over the next couple of months,” Andrew Hunter of Capital Economics wrote in a note. “The rest of the report supports our view that underlying inflation is unlikely to rise much further from here.”
The Bureau of Labor Statistics also reported Wednesday that real average hourly earnings increased 0.7% in the 12 months to October, from 0.5% in September. Real average weekly earnings increased 0.9% year-over-year, a faster pace of gains from 0.8% in September.
STOCKS: Macy’s falls despite posting earnings beat, pot stocks decline
Macy’s (M) beat Wall Street’s estimates on quarterly earnings and raised its outlook for the full year. Macy’s delivered earnings per share of 27 cents on revenue of $5.4 billion, versus estimates of 14 cents per share on revenue of $5.41 billion. Same-store sales increased 3.3% on an owned plus licensed basis, beating estimates of 2.8% growth. The company also said it expects a strong holiday quarter, helping it to boost its forecast for full-year adjusted EPS to between $4.10 and $4.30, versus consensus estimates of $4.03. Despite the earnings beat, shares of Macy’s declined 7.21% to $33.21 at the close as some analysts wait to see whether the department store chain can stand up to competition heading into the holiday season.
Canopy Growth Corporation (CGC) missed consensus expectations for quarterly revenue and reported higher costs and wider losses. Revenue for the Canadian cannabis company in at C$23.3 million ($17.6 million), while analysts were anticipating C$59.1 million. Canopy sold more product at a higher average price in the quarter, with sales volume up 177 kilograms to 2,197 kilograms at an average price of C$9.87 from C$7.99 a year earlier. Net loss widened to C$330.6 million, or C$1.52 per share, from a loss of C$1.6 million the period prior. Shares of Canopy fell 11.23% to $34.16 per share as of market close.
Peer pot stock Tilray (TLRY) on Tuesday reported a decline in average selling prices and margins in the third quarter, sending shares tumbling in late trading. Average selling prices fell to $6.21 from $7.53 and margins tightened to 30% from 55% in the year-ago quarter. Tilray’s revenue increased 86% over last year to $10.04 million, but net loss including stock-based compensation and higher operating costs rose to $18.7 million, compared with $1.8 million a year ago. Shares of Tilray fell 8.26% to $102.34 per share as of market close.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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