Stock Market News For July 08, 2016

Benchmarks closed mixed on Thursday following a fall in crude prices and gains in shares of Costco. Decline in oil prices following a weaker-than-expected fall in crude inventories weighed on energy stocks and eventually on the broader markets. However, rise in Costco’s shares helped the Nasdaq to close in positive territory. Despite encouraging private job data, investors remained cautious ahead of Friday’s job report.

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) decreased 0.1%, to close at 17,895.88. The S&P 500 also fell 0.1% to close at 2,097.90. However, the tech-laden Nasdaq Composite Index closed at 4,876.81, gaining 0.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 1.3% to settle at 14.76. A total of around 6.7 billion shares were traded on Thursday, lower than the last 20-session average of 7.78 billion shares. Advancers outpaced declining stocks on the NYSE. For 52% stocks that advanced, 45% declined.

Oil prices fell yesterday after the U.S. Energy Information Administration (EIA) reported a lower-than-expected decline in crude inventories. EIA reported that the U.S. commercial crude oil inventories fell 2.2 million barrels to 524.4 million for the week ended July 1. It was narrower than analysts’ forecasts of a decrease of 2.3 million barrels. Further, it was also narrower than a decrease of 6.7 million barrels reported by the American Petroleum Institute (API) a day earlier.

According to the EIA report, motor gasoline inventories fell only 122,000 barrels last week, also narrower than analysts’ forecasts 353,000 barrels. WTI crude fell 5.1% to $45.14 per barrel, falling below the resistance level of $46 a barrel and reaching its lowest settlement since May 10. Brent crude also slumped 5.2% to $46.40 a barrel.

Decrease in oil prices led the Energy Select Sector SPDR (XLE (NYSE:XLE)) to fall 1%, which emerged as one of the biggest decliner among the S&P 500 sectors. Key energy stocks including, Valero Energy Corporation (NYSE:VLO) (VLO), Marathon Petroleum Corporation (NYSE:MPC) (MPC), Murphy Oil Corporation (NYSE:MUR) (MUR), Phillips 66 (NYSE:PSX) ( PSX) and Concho Resources, Inc. (CXO) declined 2.9%, 2.8%, 2.3%, 2.8% and 2.1%, respectively. Dow components Exxon Mobil Corporation (NYSE:XOM) (XOM) and Chevron Corporation (NYSE:CVX) (CVX) decreased 1.2% and 1.5%, respectively.

Additionally, safe-haven sectors like utilities and telecom declined after it was speculated that rising investment in these sectors might overvalue utilities and telecom stocks. The Utilities Select Sector SPDR (XLU) fell 1.9% and was the worst performer among the S&P 500 sectors. Key utilities stocks including Public Service Enterprise Group (NYSE:PEG) Inc. (PEG), Exelon Corporation (NYSE:EXC) ( EXC), Xcel Energy Inc (NYSE:XEL). (XEL), NextEra Energy (NYSE:NEE), Inc. (NEE) and Duke Energy Corporation (NYSE:DUK) (DUK) decreased 2.6%, 2.5%, 2.2%, 2% and 2.2%, respectively.

Further, the telecom services sector within the S&P 500 lost 1.6%. Some of its key holdings including AT&T (NYSE:T), Inc. ( T) and Verizon Communications Inc (NYSE:VZ). (VZ) fell 1.9% and 1.6%, respectively.

In company news, Humana (NYSE:HUM) Inc’s (HUM) shares plunged 9.6% on news that the U.S. Department of Justice showed strong concerns over proposed takeover of the company by Aetna Inc (NYSE:AET). (AET). Humana registered its worst intra-day fall since July 31, 2012. Further, shares of Aetna fell 4%. Both Humana and Aetna were two biggest losers among the S&P 500 companies.

However, shares of Costco Wholesale Corporation (NASDAQ:COST) (COST) rose 4.9% after reporting better-than-expected same-store sales last month. Costco’s total sales remained flat in June as compared to analysts’ projections of 1.5% decline. Its same-store sales excluding foreign exchange and gasoline price deflation was at $11.33 billion, which increased by 3% from year-on-year’s figure.

Gains in Costco made the company the best performer among the S&P 500 companies and helped the tech-based index, Nasdaq to end in the green.

Yesterday, a report from Automatic Data Processing, Inc. (ADP) revealed that private sector employers added 172,000 jobs in June, which was higher than May’s revised figure of 168,000.

Moreover, the U.S Department of Labor reported that seasonally adjusted initial claims decreased 16,000 to 254,000 for the week ending July 2, reaching close to a three month low. Initial claims were also less than the consensus estimate of 268,000.

Initial claims remained below 300,000 for 70 consecutive weeks, its longest stretch since 1973. Also, the 4-week moving average came in at 264,750 last week, lower than 267,250 reported for the week ending June 25.