The Dow and the S&P 500 finished in the red on Wednesday due to decline in energy shares. Slump in crude oil prices on a spike in U.S. oil stockpiles dragged energy shares down. Caterpillar, in the meantime, weighed on the Dow as its shares were hammered after a report commissioned by the government accused the company of tax-accounting fraud. The Nasdaq, somehow, narrowly avoided a loss and finished in positive territory. On the economic front, an upbeat private sector employment report bolstered expectations of a rate hike next week.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) declined 0.3% to close at 20,855.73. The S&P 500 fell 0.2% to close at 2,362.98. The tech-laden Nasdaq Composite Index, on the other hand, closed at 5,837.55, increasing 0.1%. The fear-gauge CBOE Volatility Index (VIX) gained 1.5% to settle at 11.92. Declining issues outnumbered advancing ones on the NYSE on Wednesday.
Energy Shares Decline
Rise in crude inventories adversely affected oil prices. U.S. crude supplies added 8.2 million barrel last week, pushing total commercial inventories to a new record weekly level of 528.4 million, according to the U.S. Energy Information Administration (EIA). This marked the ninth straight weekly gains. But, gasoline supplies declined 6.6 million barrels, while distillate stockpiles fell 2.7 million barrels last week, according to the EIA.
Nevertheless, the WTI and Brent crude tanked 5.7% and 5.3% to $50.28 per barrel and $53.11 a barrel, respectively. Energy shares took a beating due to drop in oil prices. The Energy Select Sector SPDR (XLE) decreased 2.6% and emerged as the worst performing sector in the S&P 500. Some of its key holdings, including Chevron Corporation (CVX) and Exxon Mobil Corporation (XOM) dropped 1.9% and 1.8%, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of manufacturing giant Caterpillar Inc. (CAT) were down 2.8% after a new report, commissioned by the government, accused the company of tax and accounting fraud, according to The New York Times.
“Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules,” Leslie A Robinson, an accounting professor at the Tuck School for Business at Dartmouth College and author of the report wrote, according to the Times. “I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent” (read more: Caterpillar Stock Slides After Report Accuses It of Tax Fraud).
ADP Report Encouraging
Paycheck-processing firm Automatic Data Processing (ADP) reported that the private sector added 298,000 jobs in February, a full 100,000 higher than the 188,000 expected by analysts. Not only that, January’s strong ADP number was revised upward 15,000 to 261,000, marking the strongest 2 private-sector jobs numbers we’ve seen in a while.
Stocks That Made Headlines
Staples Q4 Earnings Meet Estimates; Issues Guidance
Staples, Inc. (SPLS) reported in-line earnings for the third straight quarter, when the company reported fourth-quarter fiscal 2016 results. (Read More)
Chevron Declares Growth Plans, Issues 2017 Guidance
California-based integrated energy company Chevron Corporation recently issued a statement on its annual analyst day bringing in pleasant news for investors. (Read More)
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Chevron Corporation (CVX): Free Stock Analysis Report
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