Stocks climbed early on as a solid quarter from Morgan Stanley revived optimism about banks, and strong results from auto and industrial parts distributor Genuine Parts sent car makers and suppliers higher.
The gains began to fade around noon as oil prices and energy companies sagged. The losses accelerated after the mid-afternoon release of the Federal Reserve’s “Beige Book” survey of economic conditions.
The Fed said economic growth continued from mid-March into early April and pay improved for some workers. But investors have been wondering when rising statistics like consumer confidence will start to turn into better pay and greater spending.
“Show me where those numbers are translating into something more than just feelings,” said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. “People are looking for evidence that these confidence numbers are translating into actual actions and the Beige Book showed that over the last couple of months it’s been more of the same.”
The Standard & Poor’s 500 index finished down 4.02 points, or 0.2 percent, at 2,338.17. It rose as much as 10 points, or 0.4 percent, earlier. The Dow lost 118.79 points, or 0.6 percent, to 20,404.49. Half of the blue-chip index’s losses came from IBM, which reported weaker-than-expected sales in the first quarter.
The Nasdaq composite rose 13.56 points, or 0.2 percent, to 5,863.03 as health care companies climbed. And there were signs of optimism about the economy as well. The Russell 2000 index, which is made up of smaller companies that tend to be more U.S.-focused, added 5.24 points, or 0.4 percent, to 1,367.13 after a late gain a day ago.
Oil prices slumped after the Energy Information Administration said U.S. crude inventories didn’t shrink as much as investors hoped they would last week, and the EIA says the stockpiles are larger than normal for this time of year. Benchmark U.S. crude lost $1.97, or 3.8 percent, to $50.44 a barrel in New York. Brent crude, used to price international oils, fell $1.96, or 3.6 percent, to $52.93 per barrel in London.
All 34 energy companies on the S&P 500 finished lower. Chevron $1.45, or 1.4 percent, to $104.23 and Marathon Oil sank 68 cents, or 4.3 percent, to $15.06.
Schutte, of Northwestern Mutual Wealth Management, said faster wage growth will show up eventually even if monthly and quarterly reports are uneven. As wages rise and people spend more money, he thinks the economy will keep growing.
“The consumer is in a very good place from a debt-to-asset standpoint,” he said, after reducing debt in recent years. “When they get wage increases, they’re more likely to spend those in the future than to save them.”
Schutte said that will ultimately help the stock market more than any of President Donald Trump’s proposed pro-growth policies would.
Technology and consulting company IBM slumped after it reported $18.16 billion in revenue in the first quarter, and according to FactSet, that was more than $200 million below analysts’ estimates. IBM stock fell $8.36, or 4.9 percent, to $161.69. It was the second day in a row that a weak report from a single company pulled the Dow sharply lower, as Goldman Sachs did the same on Tuesday.
Bond prices fell, reversing most of their gains from a day earlier. The yield on the 10-year Treasury note rose to 2.21 percent from 2.17 percent. That hurt high-dividend payers including utilities and household goods companies. FirstEnergy shed 62 cents, or 2 percent, to $30.85 and beauty products retailer Coty surrendered 42 cents, or 2.3 percent, to $17.99.
Genuine Parts raised its profit forecast for the year, although it acknowledged its U.S. business has been weak. Its stock jumped $1.77 percent, to 2 percent, to $91.91. Genuine Parts, along with car makers, used car sellers, and retailers of auto parts and tires plunged earlier this month after automakers reported disappointing March sales. Some investors felt that was a warning sign about spending by consumers.
Robotic surgery system maker Intuitive Surgical climbed after its profit and revenue came out ahead of analysts’ projections. The company said shipments of its da Vinci device and surgeries performed with it both jumped. The stock rose $48.60, or 6.4 percent, to $807.95 and it helped health care companies climb higher.
In other energy trading, wholesale gasoline fell 5 cents, or 3 percent, to $1.66 a gallon. Heating oil lost 4 cents, or 2.5 percent, to $1.58 a gallon. Natural gas rose 4 cents to $3.19 per 1,000 cubic feet.
The price of gold, which has climbed steadily in recent weeks, fell $10.70 to $1,283.40 an ounce. Silver lost 11 cents to $18.16 an ounce. Copper added 1 cent to $2.53 a pound.
The dollar rose to 108.70 yen from 108.42 yen. The euro edged down to $1.0721 from $1.0730.
British stocks continued to fall. The FTSE 100 slid 0.5 percent after a 2.5-percent plunge on Tuesday. Other major European indexes recovered modestly. In France the CAC-40 gained 0.3 percent and Germany’s DAX edged up 0.1 percent. In Japan the Nikkei 225 edged up 0.1 percent and the South Korean Kospi shed 0.5 percent. Hong Kong’s Hang Seng index fell 0.4 percent.