Benchmarks ended mostly in the red following volatile movement in oil prices and Fed Chair Janet Yellen's remarks on economic conditions and rate hike possibilities. Both the Dow and the S&P 500 fell for the fourth consecutive session. While persistent decline in materials and energy stocks dragged the S&P 500 down, losses from IBM and Walt Disney weighed on the Dow. On the other hand, gains from technology and biotech shares helped the Nasdaq to end in positive territory snapping a three-straight session of losses.
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 0.6%, to close at 15,914.74. The Standard & Poor's 500 (S&P 500) decreased only 0.02% to close at 1,851.86. However, the tech-laden Nasdaq Composite Index closed at 4,283.59 rising around 0.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 0.9%, to settle at 26.29. A total of around 9.1 billion shares were traded on Wednesday, lower than the last 20-session average of 9.6 billion. Advancers outpaced declining stocks slightly on the NYSE. For 52% stocks that advanced, 46% declined.
Late Tuesday, the American Petroleum Institute (API) reported an increase of 2.4 million barrels in crude inventories for the week ended Feb 5. In contrary to the API's report, the U.S. Energy Information Administration stated a decrease of 800,000 barrels for the week. Latest industry data raised concerns over the guidance on oil supply and demand, which dragged down the WTI crude price. WTI crude fell 1.8% to $27.45 a barrel, declining below the level of $28 in the last three weeks. However, the Brent crude increased 1.7% to $30.84.
Decline in WTI crude made a negative impact on energy and material sectors. The Energy Select Sector SPDR (XLE) decreased 0.4% and was one of the key losers among the S&P 500 sectors. Dow component Exxon Mobil Corp ( XOM ) dropped 0.9%. Other key components including, Schlumberger Ltd ( SLB ), Pioneer Natural Resources Co. ( PXD ), ConocoPhillips ( COP ) and Phillips 66 ( PSX ) decreased 0.1%, 2.3%, 3.7% and 0.2% respectively.
The Materials Select Sector SPDR ETF (XLB) declined nearly 1% and was the biggest loser among the S&P 500 sectors. Key holdings such as The Dow Chemical Company ( DOW ), E. I. du Pont de Nemours and Company ( DD ), Monsanto Company ( MON ), Ecolab Inc. ( ECL ) and Praxair Inc. ( PX ) fell 0.9%, 2%, 4.5%, 0.9% and 0.4% respectively.
Separately, the Dow experienced its longest stretch of decline since Aug 25. Walt Disney Co. ( DIS ) and IBM ( IBM ) were the biggest decliners among the Dow components. Shares of IBM fell 3.1%, while Walt Disney dropped 3.8%.
Concerns over Disney's cash cow ESPN was the main reason behind the decline in company's shares yesterday. ESPN has been under pressure for some time now as its subscribers have been cutting the cord. The Pay TV landscape has changed drastically in recent years with subscribers moving to online streaming services. Also, operating income in Cable Networks segment decreased 5% to $1.2 billion due to a decrease at ESPN attributable to higher programming costs. However, the company succeeded to beat the Zacks Consensus Estimate on both top and bottom line figures.
Meanwhile, the Nasdaq ended in positive territory led by gains in technology and biotech stocks. The Technology Select Sector SPDR (XLK) increased 0.2% and was one of the key gainers among the S&P 500 sectors. Key holdings from the sector including Microsoft Corporation ( MSFT ), Facebook, Inc. ( FB ) and Google Inc ( GOOGL ) increased 0.9%, 1.5% and 0.8% respectively.
Additionally, the Health Care Select Sector SPDR (XLV) increased 0.9% and was the second best performer among the S&P 500 sectors. The iShares Nasdaq Biotechnology (IBB) rose 0.6%. Key stocks from the bio-tech sector including Biogen Inc. ( BIIB ), Amgen Inc. ( AMGN ), Gilead Sciences Inc. ( GILD ) and Regeneron Pharmaceuticals, Inc. ( REGN ) advanced 0.9%, 1.2%, 0.6% and 0.4% respectively.
Meanwhile, the Fed Chairwoman Janet Yellen, in her semiannual testimony before Congress indicated that the Fed may not opt for any rate hikes immediately. She said that the "financial conditions in the United States have recently become less supportive of growth". However, she did mention that she "does not expect the FOMC is going to be soon in the situation where it is necessary to cut rates". She added that the labor market scenario is improving and it won't be fair to jump to any conclusion about the state of the economy.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report