By Sue Chang and Anora Mahmudova, MarketWatch
Energy shares rally, but jump in yields hits defensive
stocks
The Nasdaq Composite index sank on Thursday as large-cap
technology stocks slumped, but the Dow Jones Industrial Average was
on track for a record close following upbeat manufacturing data and
rising oil prices.
The tech-laden Nasdaq shed 72 points, or 1.4%, to 5,251, weighed
down by big declines in semiconductor and biotechnology shares. The
iShares Nasdaq Biotechnology ETF (IBB) dropped 1.3%.
The significant international exposure among tech companies
makes them more vulnerable given the recent rise in the U.S.
dollar, said Karyn Cavanaugh, senior market strategist at Voya
Financial.
The S&P 500 index fell 9 points, or 0.4%, to 2,189 as big
gains in the energy and financials sectors were offset by losses in
technology, utilities and consumer staples. So-called defensive
sectors are pressured as interest rates rise, measured by the yield
on the 10-year Treasury which climbed to 2.46%, a 17-month
high.
Investors pocketing short-term profits as the market
consolidates following a strong run-up since early November
contributed to the selling pressure in the market, according to
strategists.
The Dow Jones Industrial Average , meanwhile, rose 45 points, or
0.3%, to 19,172, above its record high close of 19,152.14 set on
Nov. 25.
Oil futures continued to climb, with West Texas Intermediate oil
futures up more than following a deal reached by the OPEC producers
to cut production a day earlier. The jump in oil comes on the heels
of a more than 9% surge on Wednesday.
(http://www.marketwatch.com/story/oil-prices-rebound-but-many-doubtful-opec-can-get-a-deal-done-2016-11-30)
Read: These oil stocks are soaring after OPEC's cut--and more
gains are on the way
(http://www.marketwatch.com/story/these-us-oil-stocks-are-soaring-after-opecs-cut-and-more-gains-are-on-the-way-2016-11-30)
Data releases on Thursday were mixed but pointed to continued
growth in the labor market and manufacturing.
The ISM manufacturing index rose to 53.2% in November from 51.9%
in October. A reading above 50 indicates expansion. Meanwhile,
Markit's November final PMI index was at 54.1 compared with 53.4 in
October.
The number of Americans applying for unemployment benefits
(http://www.marketwatch.com/story/jobless-claims-rise-17000-to-268000-2016-12-01)over
the week ended Nov. 26 jumped 17,000 to 268,000. The layoff level
is still close to multidecade lows, however. ADP data showed
216,000 jobs were added last month.
The much-anticipated jobs report is due Friday.
"It seems like people are just waiting for Friday's jobs report
--the final data release before the Fed's meeting in two weeks,"
said Kim Caughey Forrest, senior analyst and portfolio manager at
Fort Pitt Capital Group.
"Investors haven't finished rotating out of defensive and into
more cyclical sectors yet. And December being a 'tax-loss
harvesting' month, we might see more fund managers selling their
losers and buying the winner," Forrest said.
The Energy Select Sector SPDR ETF (XLE), the most popular way
for investors to play the energy space, rose 1.4% on top of 5.1%
gain on Wednesday, its biggest one-day move since November
2011.
"Given the [drastic] change we've now seen in oil prices, this
has the potential to deliver a meaningful impact to manufacturing
costs, inflation and may also prove unsettling for consumers as
North America moves into the depths of winter," said Jamieson
Blake, retail sales manager at ADS Securities London, in a
note.
Read:This is what investors say is the biggest risk for 2017
(http://www.marketwatch.com/story/this-is-what-investors-say-is-the-biggest-risk-for-2017-2016-11-30)
Movers and shakers: General Motors Co.(GM) shares surged 5.3% to
the highest level since November 2015 after the auto maker said
November U.S. vehicle sales jumped 8% from a year ago, with all
four brands showing growth.
Shares of Guess Inc.(GES) slumped 10% after the fashion retailer
late Wednesday cuts its earnings outlook for the year
(http://www.marketwatch.com/story/guess-cuts-outlook-posts-disappointing-results-2016-11-30-17485106).
Express Inc. (EXPR) dropped 21% after the apparel and
accessories retailer beat fiscal third-quarter expectations but
provided a downbeat outlook for the current quarter
(http://www.marketwatch.com/story/expresss-stock-plunges-after-profit-and-sales-outlook-were-well-below-expectations-2016-12-01).
Dollar General Corp.(DG) fell 5% following weaker-than-expected
third-quarter results.
FuelCell Energy Inc. (FCEL) sank 12% after the struggling fuel
cell power plant company said it cut 96 jobs, or 17% of its
workforce, in an effort to cut to costs and production amid falling
sales.
Other markets: Asian markets closed firmly higher
(http://www.marketwatch.com/story/asia-stocks-higher-with-nikkei-headed-for-best-close-of-2016-2016-12-01),
lifted by optimism over the OPEC output deal. Japan's Nikkei 225
index logged its best finish of 2016. European stocks were mainly
lower
(http://www.marketwatch.com/story/european-stocks-in-the-red-as-consumer-goods-shares-fall-but-oil-shares-rise-2016-12-01).
The dollar declined against most other major currencies, with
the ICE Dollar Index down 0.3%. Gold extended losses for a third
session.
--Barbara Kollmeyer in Madrid and Carla Mozee and Sara Sjolin in
London contributed to this article.
(END) Dow Jones Newswires
December 01, 2016 14:22 ET (19:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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