U.S. stocks tried for gains on Wednesday after their best start to a month in just over three years. Oil and data remained in focus ahead of Friday’s jobs report.
WTI turned higher to hit $35.17, its highest since Jan. 6 and stocks came off session lows to briefly trade higher. The weekly crude oil inventory report showed a build in stockpiles but a continued decline in production, down 25,000 to 9.077 million barrels a day, according to StreetAccount.
“If production’s coming down it’s going to have a positive effect, especially on WTI,” said Art Hogan, chief market strategist at Wunderlich Securities.
Energy and financials led S&P 500 advancers, while utilities and materials lagged. IBM contributed the most to gains in the Dow Jones industrial average, while Nike and McDonald’s weighed.
Earlier, the major averages touched session lows as U.S. crude oil futures briefly fell 2 percent below $34 a barrel after the U.S. Energy Information Administration data showed a build of nearly 10.4 million barrels, more than the 9.9 million barrels the American Petroleum Institute reported late Tuesday.
“The oil inventories were very negative in terms of today’s trading overall for oil,” said Peter Cardillo, chief market economist at First Standard Financial.
“Considering yesterday’s strong close, the markets are lower but not really much lower. It could be much worse. What we’re seeing here is a market that is still following oil, but oil is being less of a problem for the market,” he said.
U.S. stocks traded little changed to slightly lower for much of the morning session, as of 11:39 a.m. ET.
“Obviously we had a meltup yesterday, so it’s natural we might peel some of that back,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “Otherwise we’re setting up for jobs Friday.”
The ADP employment report showed U.S. private employers added a more-than-expected 214,000 jobs in February. Treasury yields edged higher after the report.
“I think it continues to suggest we’re in the midst of a very robust labor market,” said Ryan Larson, head of equity trading, U.S., RBC Global Asset Management (U.S.).
Treasury yields traded higher, with the 2-year yield at 0.85 percent after earlier hitting 0.905 percent, its highest since Jan. 14, while the10-year yield traded near 1.86 percent, its highest since Feb. 8.
The U.S. dollar index traded mildly higher against major currencies, with the euro at $1.0835 and the yen at 113.94 yen against the greenback.
San Francisco Fed President John Williams, a non-voting member, said in a Reuters report that raising rates gradually is the “right strategy.” The U.S. economy still needs “some accommodation” over the next few years but it is powering through headwinds from abroad and faces no tangible risk of recession.
The Fed’s beige book is scheduled for release at 2 p.m.
Ahead of the nonfarm payrolls report due Friday morning, ISM services is scheduled for release Thursday.
“I think one of the things that is important to see come to light after days like yesterday (is) we’re not giving back gains in subsequent days,” Larson said.
The major averages closed 2 percent higher or more Tuesday for their best first trading day of a month since January 2013. The Nasdaq composite outperformed with gains of 2.89 percent, closing above its 50-day moving average for the first time in 2016. The S&P 500 and Dow also ended above their 50-day moving averages.
“You’re hard pressed to find a real answer why the market gapped up the way it did (Tuesday) especially after Monday’s lousy performance. … I think yesterday you had the big heavy buying. Today you have the market pausing,” said Adam Sarhan, CEO of Sarhan Capital.
In political news, Donald Trump was the projected winner of seven GOP primaries, NBC News reported. U.S. Secretary of State Hillary Clinton won seven states, although Vermont U.S. Sen. Bernie Sanders had a solid showing by taking four states.
Overseas, European stocks were narrowly mixed, while in Asia the Nikkei 225 and Shanghai composite surged more than 4 percent.
The S&P 500 traded down 4 points, or 0.21 percent, at 1,974, with utilities leading nine sectors lower and health care the only advancer.
The Nasdaq composite declined 5 points, or 0.13 percent, to 4,684.
About two stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 44 million and a composite volume of 171 million.
Crude oil futures for April delivery fell 57 cents to $33.83 a barrel on the New York Mercantile Exchange. Gold futures for April delivery gained $3.30 to $1,234.30 an ounce.
On tap this week:
Earnings: Costco, Semtech, Pure Storage, Brown-Forman, Abercrombie and Fitch
2 p.m. Beige book
Earnings: Kroger, Royal Ahold, Barnes and Noble, Joy Global, Broadcom, Embraer, Ciena, Trina Solar, Cooper Cos.\
7:30 a.m.: Challenger Job-Cut report
8:30 a.m. Initial claims; productivity and costs
9:45 a.m. Services PMI
10 a.m. ISM nonmanufacturing; factory orders
10:30 a.m.: Natural gas inventories
10:45 a.m.: Dallas Fed President Rob Kaplan speaks
Earnings: Staples, WPP Group
8:30 a.m. Employment report; international trade
1 p.m.: Oil rig count
1 p.m.: Dallas Fed President Rob Kaplan speaks
*Planner subject to change.
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