By Ellie Ismailidou and Sara Sjolin, MarketWatch
Energy stocks tumble; Caterpillar leads losses for Dow
industrials
U.S. stocks opened lower Friday, as oil prices tumbled again on
persistent oversupply concerns, weighing on energy companies'
stocks.
Investors largely shrugged off a reading on U.S. consumer
inflation that came in slightly above economists' expectations, as
lower gas prices offset the higher cost of rent and medical
care.
The S&P 500 traded 11 points, or 0.6%, lower at 1,906. The
Dow Jones Industrial Average lost 85 points, or 0.5%, to 16,329 in
early trade. Meanwhile, the Nasdaq Composite began the day down 13
points, or 0.3%, at 4,475.
A fresh slide in crude-oil prices
(http://www.marketwatch.com/story/record-high-us-crude-stockpiles-weigh-on-oil-prices-2016-02-19),
after data showed Thursday that U.S. oil inventories have risen
again and Saudi Arabia ruled out a production cut, continued to
weigh on sentiment. Brent also slid over 2%.
The energy sector was bearing the brunt of Friday's selloff,
with the S&P energy sector leading the losses, down 1.1%,
followed by materials, down 1%. Energy-related plays were among the
biggest decliners on the Dow industrials, as shares of Caterpillar
Inc. (CAT) led the blue-chip gauge's decliners with a drop of
2.7%.
Focus on inflation: The consumer price index was flat last month
(http://www.marketwatch.com/story/consumer-inflation-flat-in-january-2016-02-19),
the government said Friday. Excluding volatile food and energy
prices, so-called core consumer prices jumped 0.3%, the biggest
gain since August 2011, while year-over-year, core prices rose
2.2%.
"Goods deflation is being completely offset by services
inflation and this constant talk that we are in a global
deflationary spiral is nonsense," said Peter Boockvar, chief market
analyst at The Lindsey Group, in emailed comments after the
release.
The interpretation of inflation data is crucial, as Fed policy
makers will rely on it to determine the timing of any further rate
increases. Recent U.S. economic data have been mixed, and some Fed
speakers this week expressed concerns that inflation is not strong
enough to warrant further interest rate increases.
St. Louis Fed President James Bullard expressed worries Thursday
that inflation expectations have been trending lower
(http://www.marketwatch.com/story/heres-why-feds-bullard-is-now-leery-of-more-interest-rate-increases-2016-02-18),
hinting that at this pace it could take longer for the Fed to reach
its 2% annual inflation target.
Boockvar, on the other hand, pointed to the discrepancy between
different inflation gauges.
The personal consumption expenditures (PCE) price index, the
Fed's favorite inflation gauge, is estimated to remain about 0.7
percentage points lower than the CPI, and well below the Fed's 2%
target. "This is a large enough difference that the Fed should
finally explain," Boockvar added.
"The current unstable economic landscape has left the Fed under
immense pressure not to raise U.S. rates anytime soon, and this has
left the dollar noticeably vulnerable, while domestic data from the
States continues to follow a soft path," said Lukman Otunuga,
research analyst at FXTM, in a note.
Read:Here's why the Fed -- not the market -- might be right
about a recession
(http://www.marketwatch.com/story/heres-why-the-fed-not-the-market-might-be-right-about-a-recession-2016-02-18)
U.S. stocks ended lower on Thursday
(http://www.marketwatch.com/story/wall-street-tiptoes-higher-as-investors-wait-for-philly-fed-labor-data-2016-02-18)
after a gauge of manufacturing activity in the Philadelphia area
indicated contraction for a sixth straight month.
Movers and shakers: Shares of Nordstrom Inc. (JWN) tumbled 9%
after the company reported tepid holiday-quarter results
(http://www.marketwatch.com/story/nordstrom-reports-tepid-holiday-quarter-results-2016-02-18-164855745).
Weight Watchers International Inc. (WTW) surged 11% after a
study by the Indiana University School of Medicine showed that
Weight Watchers could help prevent diabetes.
Shares of Applied Materials Inc. (AMAT) gained 7% after the
maker of machinery used to produce computer chips reported earnings
late Thursday that beat Wall Street's expectations
(http://www.marketwatch.com/story/applied-materials-rallies-as-quarterly-earnings-beat-wall-streets-expectations-2016-02-18).
Qualcomm Inc. (QCOM) jumped 7.7% after the maker of processors
and modem chips for smartphones said late Thursday it has reached a
new patent-licensing deal with Lenovo Group Ltd. (0992.HK).
TrueCar Inc. (TRUE) slumped 21%, after the car-shopping website
late Thursday posted results and revenue outlook that came in below
analyst expectations
(http://www.marketwatch.com/story/truecars-results-outlook-miss-wall-street-view-2016-02-18).
Deere & Company (DE) lost 4% after the tractor manufacturer
reported a drop in quarterly profit and revenue before the market
opened on Friday.
Other markets:Stocks in Asia
(http://www.marketwatch.com/story/asian-markets-slip-after-week-of-recoveries-2016-02-18)
took a cue from the weak close in the U.S. and ended mostly lower.
However, the main indexes still logged solid gains for the week,
after steep selling earlier in the month.
European markets
(http://www.marketwatch.com/story/european-stocks-waver-as-oil-prices-step-back-2016-02-19)
were sharply lower. The U.K.'s FTSE 100 index fell 0.5% as Prime
Minister David Cameron kicked off a second day of negotiations in
Brussels over how to reset the country's relationship with the
European Union. Thursday's talks stretched into the early hours of
Friday morning
(http://www.marketwatch.com/story/uk-talks-on-eu-run-late-into-the-night-as-leaders-dig-in-heels-2016-02-19)
as some key differences among European leaders remained.
The greenback traded mixed against other major currencies ahead
of the data, with the ICE dollar index gaining less than 0.1% to
96.99. Metals prices were mostly lower.
(END) Dow Jones Newswires
February 19, 2016 10:17 ET (15:17 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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