By Anora Mahmudova and Carla Mozee, MarketWatch
Sharp drop in oil weighs on energy stocks
U.S. stocks lost steam by the end of Tuesday's session and
closed mostly lower, though Dow industrials eked out a small gain
to finish at a fresh record.
Falling oil prices weighed on energy stocks, with the sector
selling off sharply. Meanwhile, investors digested a report showing
a sharp increase in housing starts last month, pondering the effect
it might have in determining the course of the Federal Reserve's
interest rate policy.
The S&P 500 index (SPX) closed off 1.38 points, or 0.1% at
2,127.82, breaking its three-day record-scoring streak. The Dow
Jones Industrial Average (DJI), eked out a gain of 13.51 points, or
0.1%, to 18,312.39, scoring a its second consecutive record close.
The Nasdaq Composite (RIXF) ended 8.41 points, or 0.2%, lower at
5,070.03.
Recent trading volume has been lighter than usual, with Monday's
session seeing the second-lowest trading volume of the year so
far.
Describing recent record levels, Andrew Adams, chief market
technician at Raymond James, described it as anticlimactic. "Since
closing at all-time highs last Thursday, the past two sessions have
only seen us gain nine points on fairly lackluster volume, and the
internals have not been very compelling either," Adams wrote in a
note to investors.
But he is still optimistic: "Unless we fall back into the
sideways mess, I remain optimistic and will gladly take boring
profits over exciting losses any day."
Lance Roberts, portfolio manager at STA Wealth, said the recent
advance is mostly due to rotation out of European equities and into
domestic ones.
"Markets are overextended and overbought by every possible
measure, but the short-term trend points to stocks going higher. We
are still fully allocated to stocks at this point, but probably not
for long," Roberts said.
Expectations for an interest rate hike have been pushed back
after a stream of disappointing economic reports so far this year,
with markets pricing in a rate increase late in the year.
Data:Construction started on new U.S. homes sprang up 20.2% in
April
(http://www.marketwatch.com/story/us-housing-starts-shoot-up-202-in-april-to-114-million-annual-rate-2015-05-19)to
a seasonally adjusted annual rate of 1.14 million, hitting the
fastest rate since late 2007 and far above forecasts.
Corporates: In company news, Wal-Mart (WMT) shares fell 4.4%
after the world's largest retailer's first-quarter profit and sales
fell short of expectations
(http://www.marketwatch.com/story/wal-marts-stock-drops-after-profit-sales-miss-expectations-2015-05-19).
Home-improvement retailer Home Depot(HD) posted a rise in
first-quarter earnings and sales and raised its sales guidance for
fiscal 2015. Shares, however, dropped 1.7%.
Retailer TJX Cos.(TJX) shares rose 2.9% after sales beat
estimates and the company raised its full-year outlook.
Take-Two Interactive Software Inc. (TTWO) shares jumped 18%
after the videogame maker's earnings beat Wall Street
estimates.
For more on today's movers read Movers & Shakers column
(http://www.marketwatch.com/story/wal-mart-home-depot-tjx-etsy-earnings-in-focus-2015-05-18).
Other markets: European equities rallied. The rises came after a
high-level European Central Bank official, Benoît Coeuré, said the
bank will step up its buying of euro-area assets in May and June
(http://www.marketwatch.com/story/euro-falls-after-ecbs-coeure-says-bank-will-front-load-qe-buying-2015-05-19)
to compensate for low liquidity in the summer months.
The euro (EURUSD) fell 1.5% against the dollar after Coeuré's
comments and the release of data on housing starts.
Overnight in Asia, Shanghai stocks rallied 3%, their biggest
gain in nearly four months, after China unveiled plans
(http://www.marketwatch.com/story/china-delivers-plan-to-upgrade-manufacturing-2015-05-19)
to boost the competitiveness of its manufacturing sector.
Oil futures (CLM5) fell 3.7% to settle at $57.26 a barrel, its
lowest level of the month, as the commodity took a hit from a
stronger dollar. Gold prices (GCM5) slid 1.7% to settle at
$1,206.70 an ounce.
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