MARKET SNAPSHOT: S&P 500 Falls For Fourth Straight Session As Energy Weakness Offsets Tech Recovery

12/06/17 04:27 PM EST

By Sue Chang, MarketWatch , Ryan Vlastelica

More private-sector jobs added in November than expected: ADP

U.S. stocks ended mixed on Wednesday, as weakness in the energy sector spurred some minor selling that offset a recovery in the technology sector.

The S&P 500 ended essentially unchanged on the day, although it closed in slightly negative territory. That made for its fourth straight lower close, its longest losing streak since March.

What are the main benchmarks doing?

The Dow Jones Industrial Average fell 39.73 points, or 0.2%, to 24,140.91. The S&P 500 fell by 0.3 point to 2,629.27. The Nasdaq Composite Index rose 14.16 points to 6,776.38, a gain of 0.2%.

Energy shares were among the biggest decliners of the day, with the sector falling 1.3% alongside a 2.9% drop in the price of crude oil. On the upside, technology shares rose 0.8%. The group has been struggling recently, and is down 1.8% thus far in December. Facebook (FB) rose 1.9%.

The tech-heavy Nasdaq, down over 1% for the week, has seen the most selling in recent sessions, with analysts blaming profit-taking after big gains in large-capitalization tech stocks (http://www.marketwatch.com/story/brace-for-more-tech-pain-and-more-cheer-for-the-stock-markets-sad-sacks-2017-11-30), as well as worries over the possible retention of a corporate alternative minimum tax as the U.S. overhauls its tax system. However, the sector is considered one of the fastest-growing parts of the economy, and investors have frequently used pullbacks to buy on dips.

See: Here's how violent the stock-market rotation out of tech has been (http://www.marketwatch.com/story/heres-how-violent-the-stock-market-rotation-out-of-tech-has-been-2017-12-05)

Read more:Risks 'high and rising' for big drop in stocks, bonds, says government watchdog (http://www.marketwatch.com/story/the-risks-from-a-big-stock-or-bond-market-drop-are-high-and-rising-government-watchdog-says-2017-12-05)

What's moving markets?

The retention of the corporate alternative minimum tax in the Senate version of the Republicans' tax bill has been seen as a factor in tech-stock selling. The House's bill repealed the corporate AMT, but in a last-minute switch before passing its bill early Saturday morning, the Senate decided to keep the provision.

Senate Finance Committee Chairman Orrin Hatch, R-Utah, on Wednesday told reporters the final legislation likely won't retain the corporate AMT, but added "you never know," according to Reuters (https://www.reuters.com/article/usa-tax-amt/corporate-amt-likely-will-not-be-in-final-u-s-tax-bill-hatch-idUSL1N1O61SW).

Read:Here's why the corporate AMT is a hurdle to a final tax bill (http://www.marketwatch.com/story/heres-why-the-corporate-amt-is-a-hurdle-to-a-final-tax-bill-2017-12-05)

On the data front, private-sector employers added 190,000 jobs in November (http://www.marketwatch.com/story/private-sector-adds-healthy-190000-jobs-in-november-adp-says-2017-12-06), which was above expectations but below the rate added in October.

Separately, the increase in productivity of American firms and workers was unchanged at 3% in the third quarter under the government's first do-over of its original report (http://www.marketwatch.com/story/us-third-quarter-productivity-gain-left-at-3-2017-12-06).

What are strategists saying?

Analysts said tech stocks could still prove vulnerable to further weakness.

"People are becoming a little more risk averse with the march up in technology. While these are great companies, a stock like Amazon (AMZN) isn't cheap. They've had a huge run, and they'll need a pause to refresh a bit, which could be 10-15%, or even 25% in some names," said Chris Bertelsen, chief investment officer at Aviance Capital Management, LLC.

"However, it isn't the end of the world. We haven't had a drawdown in a long time, so one could happen at any time, especially given the confluence of global political risk, and the fact that valuations aren't totally out of control, they are on the high side."

Also in focus was the prospect of a U.S. government shutdown. Federal government operations are funded through Friday, and would partially shut down if there's no deal by politicians to extend funding. On Wednesday, President Donald Trump mentioned the possibility of a shutdown over the coming week, saying it "could happen." Stocks didn't react to Trump's statement.

Read:Here's how the stock market has handled past government shutdowns (http://www.marketwatch.com/story/heres-how-the-stock-market-has-handled-past-government-shutdowns-2017-12-06)

(http://www.marketwatch.com/story/unitedhealth-to-buy-davita-doctor-group-for-49b-2017-12-06)Which stocks are on the move?

Shares in Google parent Alphabet Inc.(GOOGL) (GOOGL) rose 1.3% while Amazon was up 0.9%. Earlier, it was reported that Google had pulled YouTube from Amazon streaming devices (http://www.marketwatch.com/story/google-pulls-youtube-from-amazon-streaming-devices-2017-12-05).

American Eagle Outfitters Inc.(AEO) rose 2.4% after it reported third-quarter same-store sales that came in above analyst forecasts (http://www.marketwatch.com/story/american-eagle-outfitters-shares-rise-after-same-store-sales-beat-expectations-2017-12-06).

Brown-Forman Corp.(BFA), parent of whiskey-maker Jack Daniel's, rose 6.5% after it reported its quarterly results.

United Parcel Service Inc.(UPS) fell 1.7% after the shipping giant warned about delivery delays (http://www.marketwatch.com/story/ups-warns-of-some-delivery-delays-amid-online-shopping-surge-2017-12-05).

UnitedHealth Group Inc.(UNH) said it would buy DaVita Inc.'s (DVA) physician group for about $4.9 billion in cash (http://www.marketwatch.com/story/unitedhealth-to-buy-davita-doctor-group-for-49b-2017-12-06). Shares of DaVita jumped 13.6% while UnitedHealth was down 0.1%.

What are other assets doing?

European stocks (http://www.marketwatch.com/story/european-stocks-on-course-for-2nd-losing-session-with-tech-knocked-down-2017-12-06) dropped for a second day in a row, while falls for tech and mining shares drove losses across Asia markets (http://www.marketwatch.com/story/asia-pacific-markets-drop-on-weakness-in-tech-mining-sectors-2017-12-05).

The ICE U.S. Dollar Index edged higher, while gold futures (http://www.marketwatch.com/story/gold-climbs-from-4-month-low-helped-by-geopolitical-worries-2017-12-06) bounced modestly from a four-month low and oil futures fell.

Bitcoin moved above $13,000 (http://www.marketwatch.com/story/bitcoin-hitting-new-records-tops-200-billion-in-market-capitalization-2017-12-05) Wednesday, hitting an all-time high.

Additional reporting by Barbara Kollmeyer and Victor Reklaitis

 

(END) Dow Jones Newswires

December 06, 2017 16:27 ET (21:27 GMT)

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