Energy and Tech Sector Gains Buoy Wall Street
Wall Street was moving slightly higher in choppy trading early this afternoon, helped by technology and energy stocks, but gains were limited by weak services data.
By Paolo Palazzi-Xirinachs
Tuesday, September 6, 2016
At 1 p.m. ET the Dow Jones Industrial Average was up 26.3 points, or 0.14% at 18,518.26. The S&P 500 was up 3.92 points, or 0.18% at 2,183.9. The Nasdaq Composite was up 21.67 points, or 0.41% at 5,271.57. The S&P 500's energy index rose 1.18%, even as oil slipped, driven by Enbridge's acquisition of Spectra Energy for about $28 billion. The Nasdaq rallied as Facebook and Amazon.com touched record highs.
Benchmark United States crude oil edged up 7 cents, to $44.51 a barrel on the New York Mercantile Exchange. It jumped $1.28 on Monday. Brent crude, the benchmark for international oil prices, dropped 65 cents, to $46.98 a barrel.
But, the real eonomic news today is that some cracks could be starting to appear in the picture of an otherwise resilient U.S. economy, and those implications - with a looming Nov 8th election - are large..
An abrupt drop in the Institute for Supply Management’s services gauge on Tuesday to a six-year low is the latest in a string of unexpectedly weak data for August. Other less-than-stellar figures include an ISM factory survey showing a contraction in manufacturing; a cooling of hiring; automobile sales falling short of forecasts; and an index of consumer sentiment at a four-month low.
While there is hardly any evidence that growth is falling off a cliff, the run of disappointing figures make it tougher to argue that the underlying momentum of the world’s largest economy is holding up. It also potentially complicates the task of Federal Reserve policy makers, who are debating whether to raise interest rates as soon as this month. Traders’ positions on a September move faded further after the report on service industries, which make up almost 90% of the economy.
The biggest gains today went to utility and phone companies. Investors also snapped up government bonds, sending prices higher and yields lower. That echoed a pattern seen in the first six weeks of this year, when the market fell hard and investors bought bonds and bondlike stocks for safety and yield. The yield on the 10-year Treasury note declined to 1.53 percent from 1.61 percent late Friday.
Bank stocks took the biggest losses. Those stocks tend to suffer when interest rates are low because it makes it harder for banks to earn money from lending. Lincoln National stock lost 2.7%, and shares of Citigroup fell 1.1%.
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