By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch
Energy shares tumble; ADP report misses impact of Verizon
strike; ECB leaves interest rates unchanged
U.S. stocks were in the red Thursday morning, weighed by falling
oil prices after the Organization of the Petroleum Exporting
Countries failed to reach an agreement on a production ceiling.
Fresh U.S. private-sector employment data
(http://www.marketwatch.com/story/adp-reports-173000-private-sector-jobs-added-in-may-2016-06-02-8103345)came
roughly within expectations, while first-time unemployment benefits
declined somewhat, increasing the likelihood of an interest-rate
increase by the Federal Reserve this summer.
Meanwhile on the other side of the Atlantic, the European
Central Bank left key interest rates unchanged, in line with
investors' expectations. But ECB President Mario Draghi said the
central bank remains ready to use all the tools within its mandate
(http://blogs.marketwatch.com/thetell/2016/06/02/ecb-live-blog-draghi-faces-questions-on-inflation-greece-and-corporate-bonds/)
to makes sure that the low inflation environment doesn't become
"entrenched."
The S&P 500 index fell 5 points, or 0.2%, to 2,094, led by a
1.1% drop in energy shares and a 0.5% drop in materials shares,
which were both dragged down by tumbling oil prices .
The Dow Jones Industrial Average fell 33 points, or 0.2%, to
17,754, led by a 1.8% drop in energy giant Exxon Mobil Corp.(XOM)
followed by a 1.4% drop in shares of Microsoft Corp.(MSFT).
Meanwhile, the Nasdaq Composite was down 7 points, or 0.1%, at
4,945.
Oil blues: OPEC on Thursday broke off its meeting without
reaching any new agreements
(http://www.marketwatch.com/story/opec-fails-to-agree-on-output-cap-2016-06-02)on
oil production, continuing a hands-off policy that members say is
gradually bringing supply and demand back into balance and boosting
prices. In the opening address, Qatar's oil minister Mohammed Bin
Saleh al-Sada said the 13-member cartel expects a sharp drop
(http://www.marketwatch.com/story/opec-sees-sharp-drop-in-non-opec-output-in-2016-2016-06-02)
in non-OPEC output in 2016.
Oil prices
(http://www.marketwatch.com/story/oil-prices-hold-steady-as-opec-members-gather-in-vienna-2016-06-02)
tumbled on the news, weighing on broader risk appetite in global
markets, while assets traditionally viewed as havens in times of
market turmoil, such as U.S. Treasurys and gold futures gained.
Growing evidence of risk aversion in the market was also
supported by the fact that the S&P 500 was flirting with a
major technical level, namely the 2,100-point "great wall," said
Mike Antonelli, equity sales trader at R.W Baird & Co.
The index has been trading in a range between 2,040 and 2,100
since April and it's unlikely that it would "go over that great
wall" ahead of two major events this month, namely the Fed's
meeting on monetary policy and the Brexit referendum, Antonelli
added.
(http://www.marketwatch.com/story/key-issues-opec-must-wrestle-with-at-june-meeting-even-as-oil-nears-50-2016-05-25)Economic
data: Private-sector employment gains accelerated slightly in May
as employers added 173,000 jobs, Automatic Data Processing Inc.
reported
(http://www.marketwatch.com/story/adp-reports-173000-private-sector-jobs-added-in-may-2016-06-02-8103345)Thursday.
Economists use ADP's private payrolls report to get a feeling
for the Labor Department's employment report, which will be
released Friday and covers government jobs in addition to the
private sector.
But economists expect the government's report to show fewer
payroll gains than the ADP survey on Friday. That's because the
government estimate will be held down by the impact of the
month-long strike by Verizon Communications (VZ) workers. Roughly
35,000 striking workers were classified as unemployed in May due to
the strike. The Verizon strike wasn't included in the ADP
estimate.
"Just as importantly, however, a low number will not necessarily
affect the chances of a Fed rate hike over the summer because that
strike was just a temporary disruption. Those workers are already
back at work and will boost the gain in employment in June," said
Paul Ashworth, chief U.S. economist at Capital Economics, in
emailed comments.
Fed. Governor Gov. Daniel Tarullo
(http://www.marketwatch.com/story/feds-tarullo-sounds-in-no-hurry-to-raise-interst-rates-2016-06-02)said
that he's inclined to hold off on interest-rate hikes to let the
labor market strengthen further.
Dallas Fed President Robert Kaplan will speak at Boston College
at 1 p.m. Eastern.
Other markets:The Stoxx Europe 600 index
(http://www.marketwatch.com/story/european-stocks-step-slightly-lower-with-ecb-opec-meetings-on-deck-2016-06-02)
held its gains after the ECB left its rates unchanged and announced
that it would kick off its previously announced corporate-bond
buying program June 8.
Read:Oil rally leaves ECB room to 'celebrate' at Thursday's
meeting
(http://www.marketwatch.com/story/oil-rally-leaves-ecb-room-to-celebrate-at-thursdays-meeting-2016-05-31)
(http://www.marketwatch.com/story/oil-rally-leaves-ecb-room-to-celebrate-at-thursdays-meeting-2016-05-31)The
dollar
(http://www.marketwatch.com/story/yen-soars-to-two-week-high-vs-dollar-after-boj-comment-2016-06-02)
took another hit overnight as the yen moved higher, knocking 2.3%
off the Nikkei 225 index
(http://www.marketwatch.com/story/nikkei-drops-another-2-as-yen-continues-to-dominate-2016-06-02),
while Asian markets overall were mixed. The euro moved lower
against the dollar
(http://www.marketwatch.com/story/yen-soars-to-two-week-high-vs-dollar-after-boj-comment-2016-06-02)after
Draghi warned that the central bank could push interest rates
further into negative territory if needed.
Stocks to watch:Apple Inc.(AAPL) fell 1% after Goldman Sachs cut
Apple's price target
(http://www.marketwatch.com/story/goldman-cuts-apple-price-target-to-factor-in-lower-smartphone-growth-2016-06-02)
to $124 from $136 a share to factor in lower smartphone growth, but
maintained its buy rating on the iPhone maker.
Tesla Motors Inc.(TSLA) fell 0.8% after Chief Executive Officer
Elon Musk offered explanations at a Recode Code Conference for
delays in Model X shipments, citing supplier issues and a shootout
on the Mexican border that held up a shipment of trunk carpets. He
also said he would like to get humans to Mars by 2025
(http://www.marketwatch.com/story/elon-musks-promise-spacex-to-take-a-human-to-mars-by-2025-2016-06-02).
Hovnanian Enterprises Inc.(HOV) tumbled 10.9% after the
homebuilder lowered its outlook for the year as it posted an
unexpected loss in the latest quarter.
Shares of Box Inc.(BOX) tumbled 11.5% after the cloud-storage
company's billings for the quarter fell short of Wall Street
expectations late Wednesday.
Johnson & Johnson(JNJ) inched higher 0.6% after the company
said it would pay $3.3 billion for privately-held hair care
products group Vogue International
(http://www.marketwatch.com/story/johnson-johnson-to-pay-33-billion-for-vogue-international-2016-06-02).
(END) Dow Jones Newswires
June 02, 2016 10:49 ET (14:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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