US open: Stocks slide as OPEC fails to agree deal on output

US stocks declined on Thursday after OPEC failed to agree a deal on output and as the US private payrolls report missed analysts’ estimates.

At 1530 BST, the Dow Jones Industrial Average fell 0.30%, the S&P 500 dropped 0.34% and the Nasdaq slid 0.22%.

At the same time oil prices fell as OPEC members failed to agree on output levels at their meeting in Vienna, although the need to draw inventories down from levels above the five-year average was acknowledged.

There were suggestions that the talks would seek some agreement on an output ceiling, but this looked unlikely as Iran, having just emerged from the yoke of international sanctions, was keen to boost production to generate much needed revenue and therefore would not agree to any cap.

West Texas Intermediate crude dipped 1.5% to $48.27 per barrel and Brent declined 1.3% to $49.06 per barrel at 1532 BST.

Traders are also looking ahead to a report on US weekly crude inventories from the International Energy Agency at 1600 BST.

Meanwhile, data released by consultancy ADP said the US private sector added 173,000 jobs in May, a touch lighter than the 175,000 that was forecast by economists.

The April figure was revised up to show a 166,000 increase from 156,000.

Mark Zandi, chief economist of Moody's Analytics, said: “Job growth has moderated this spring as energy companies and manufacturers shed jobs. Retailers are also more circumspect in their hiring. Despite the recent slowdown, job growth remains strong enough to reduce underemployment.”

The Labor Department said the number of Americans filing for unemployment benefits unexpectedly fell last week. US initial jobless claims fell by 1,000 to 267,000, versus expectations for an increase to 270,000. This marked 65 consecutive weeks of initial claims below 300,000 - the longest streak since 1973.

The labour market data comes ahead of Friday’s non-farm payrolls report, which is expected to show expect US employers added 160,000 jobs in May the same as the previous month. The unemployment rate is expected to fall to 4.9% from 5.0%.

The Fed is monitoring the health of the labour market as it determines the timing of its next interest rate hike ahead of its 14-15 June policy meeting.

“Current market pricing suggests a 24% chance of a move in June, a drop from yesterday, but with
non-farm payrolls looming on Friday we could easily see the declining trend reversed if the figures look robust on most measures,” said Chris Beauchamp, senior market analyst at IG.

In corporate news, shares in cloud storage company Box Inc tumbled after its billings for the quarter fell short of expectations late on Wednesday.

Home-builder Hovnanian Enterprises slumped after reporting second quarter earnings that fell short of analysts’ expectations.

In currencies, the dollar fell 0.25% against the pound and dropped 0.82% versus the yen but climbed 0.20% versus the euro.