US close: Stocks end little changed as oil prices tank
US stocks ended a choppy session little changed on Thursday as energy shares were dragged lower by weaker oil prices, and after the House of Representatives passed a healthcare overhaul.
The Dow Jones Industrial Average closed flat at 20,951.47, while the S&P 500 and the Nasdaq eked out a 0.1% gain to 2,389.52 and 6,075.34, respectively.
Energy shares were under pressure as oil prices tanked amid concerns that OPEC and other producing countries would not take further steps to reduce the glut of crude. West Texas Intermediate was down 5% to $45.54 a barrel and Brent crude was off 4.8% at $48.45.
IG analyst Joshua Mahony said: “Oil prices took yet another turn for the worst today, as Brent hit the lowest level since November 2016. Yesterday’s smaller than expected drawdown in US crude stocks adds weight to the notion that despite continued compliance in recent crude cuts, the surplus is here to stay. The question now is whether this will force OPEC’s hand to enforce larger and longer lasting production cuts in a bid to raise prices once more.”
In corporate news, Facebook shares slipped after the company reported a rise in quarterly profit and sales late on Wednesday but warned that revenue could slow "meaningfully" in 2017.
Electric car maker Tesla Inc was also on the back foot after it reported a widening of its adjusted quarterly loss late on Wednesday, while Avon Products tumbled after it reported a loss for the first quarter.
On the upside, healthcare companies Regeneron and Zoetis rallied after their results, while Dunkin Brands also advanced after it reported a bigger-than-expected jump in quarterly adjusted profit.
Meanwhile, investors were continuing to digest the latest policy announcement and statement from the Federal Reserve.
On Wednesday, the Fed left interest rates on hold as widely expected, although the odds of an interest rate hike at the central bank's June meeting rose to 94% from around 70% following the accompanying policy statement, in which it brushed aside the importance of weaker-than-expected first-quarter GDP figures.
Market participants were also mulling over a narrow vote by the House in favour of repealing major portions of the 2010 Affordable Care Act, also known as Obamacare, and replacing it with a Republican healthcare plan.
On the data front, figures from the Labor Department showed the number of Americans filing for unemployment benefits fell more than expected last week.
US initial jobless claims declined by 19,000 to 238,000, beating expectations for a smaller drop to 247,000. The four-week moving average came in at 243,000, up 750 from the previous week.
On Friday, the highlight will be the release of the latest non-farm payrolls report.
SpreadCo analyst David Morrison said: “The consensus forecast for tomorrow’s payrolls is an increase of 194,000. Anything around here up to 210k will probably be fairly market neutral, although it could provide the impetus for the Dow and S&P to make fresh record highs. If we get something nearer the 150,000 mark then expect the yield on the 10-year Treasury to dip back below 2.30%, the dollar to retreat and maybe a relief bounce in precious metals, at least temporarily.
“But we also have speeches from Janet Yellen and Stanley Fischer tomorrow afternoon. These could prove to be more market-moving than the payroll number itself.”