Market report

Oil-price sag saps stocks' surge

NEW YORK -- U.S. stock indexes retreated from their record heights Tuesday after a slump in the price of oil weighed on energy companies.

The Standard & Poor's 500 index fell 16.43 points, or 0.7 percent, to 2,437.03, and the Dow Jones industrial average lost 61.85 points, or 0.3 percent, to 21,467.14. Both the S&P 500 and Dow set records on Monday thanks to big gains from technology stocks.

The Nasdaq composite fell 50.98 points, or 0.8 percent, to 6,188.03, and the Russell 2000 index of small-cap stocks fell 15.11, or 1.1 percent, to 1,402.97.

Losses were widespread across the market, with five stocks dropping on the New York Stock Exchange for every two that rose. Many of the sharpest declines were concentrated in the energy sector, as the price of oil touched its lowest price since mid-November.

The price for benchmark U.S. crude fell 97 cents, or 2.2 percent, to settle at $43.23 per barrel, and Brent crude, the international standard, fell 89 cents to $46.02 per barrel.

The price of oil has been between $40 and $55 per barrel for much of the past year, down from a peak of more than $110 in the summer of 2013. Drillers have gotten much better at pulling oil from the ground, which has helped supplies to balloon and correspondingly weighed on prices. Some of the oil-producing countries have banded together to cut production in hopes of limiting supplies, but analysts are skeptical about how much they can influence prices.

One of the main reasons for the stock market's climbing to record after record this year has been the resurgence in profit growth for big companies, and the energy sector is expected to play a leading role in that. Analysts forecast energy companies in the S&P 500 will report better than 300 percent growth in their earnings per share this year. But if the price of oil keeps dropping, that's at risk.

John Manley, chief equity strategist at Wells Fargo Funds Management, is still optimistic that expectations for earnings across the market can keep rising.

"Earnings are starting to re-accelerate," he said. "It may stop tomorrow, and if it does, well, I'll change my mind tomorrow. But right now, earnings are growing."

Tuesday's slump for oil led shares of Transocean to drop 36 cents, or 4.2 percent, to $8.20 and Marathon Oil to lose 43 cents, or 3.4 percent, to $12.06.

The worst-performing stock in the S&P 500 was Chipotle Mexican Grill, which lost $33.31, or 7.3 percent, to $425.60 after analysts cut their profit estimates for the restaurant chain. Chipotle said marketing costs will eat up a slightly bigger percentage of revenue this quarter than in the first three months of the year.

On the opposite end was homebuilder Lennar, which rose $1.13, or 2.1 percent, to $53.87 after reporting stronger revenue and earnings for the latest quarter than analysts expected.

In the Treasury market, bond prices rose, which caused yields to fall. The yield on the 10-year Treasury note sank to 2.15 percent from 2.19 percent late Monday. The two-year yield dropped to 1.34 percent from 1.36 percent, and the 30-year yield fell to 2.73 percent from 2.79 percent.

Business on 06/21/2017

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