U.S. stocks closed mixed Thursday as sharp declines in oil prices weighed. Investors are also looking ahead to the highly-anticipated jobs report due Friday morning.
The Dow Jones industrial average gave up opening gains, briefly falling 100 points before closing 22.7 points lower, with Chevron, UnitedHealth, Travelers, and Exxon Mobil having the greatest negative impact. Shares of health insurer Humana and Aetna fell after a report that the U.S. Department of Justice wants to meet regarding plans to merge, raising speculation of antitrust concerns.
U.S. crude oil futures settled down $2.29, or 4.83 percent, at $45.14 a barrel. Oil erased gains to trade lower after the EIA said weekly crude inventories declined 2.2 million barrels, far less than the 6.7 million barrel drawdown the American Petroleum Institute reported late Wednesday. A reversal in oil prices higher helped stocks close higher on Wednesday.
John Kilduff, founding partner of Again Capital, said the smaller-than-expected drawdown in oil and gasoline inventories sent oil lower, and WTI broke a key support level at $46 a barrel. $43 is the next level to watch, he said.
The S&P 500 closed slightly lower, a touch below the psychologically key 2,100 level. Utilities and telecoms lagged, while energy lost 1.05 percent as one of the greatest decliners.
Doug Cote, chief market strategist at Voya Investment Management, said with oil only a few dollars below $50 it was not a major issue yet. "If it gets below $45 (a barrel) the market will have some concern," he said earlier in the day.
On the data front, private sector jobs rose by 172,000 in June, versus consensus expectations of 159,000, according to a report Thursday from ADP and Moody's. Initial jobless claims came in at 254,000 for the week of July 2.
"That gives people a little more confidence. I don't have to stay in the safe-haven stuff. Maybe that trade will back off a little bit," said Robert Pavlik, chief market strategist at Boston Private Wealth.
U.S. Treasury yields came off session highs, with the 2-year yield last near 0.59 percent. The 10-year Treasury yield was near 1.39 percent after hitting a record low Wednesday. The 30-year yield was near 2.14 percent after recently hitting fresh all-time lows.
Gold settled lower. The U.S. dollar index traded 0.2 percent higher, with the euro near $1.106 and the yen around 100.8 yen versus the greenback. Pound sterling was near $1.291 after on Wednesday hitting $1.2796, its lowest level against the dollar since June 20, 1985 when the pound closed at $1.2769.
The June non-farm payrolls report is due Friday morning and investors are watching for signs that May's disappointing headline figure was an anomaly.
"Lack of data tends to make the markets dwell on the uncertain. The payrolls number will at least give the markets something else to focus on," said Bill Stone, chief investment strategist at PNC Asset Management. He added that an improving labor market could help add some risk-on sentiment.
"As long as people think that we can continue to diverge from the rest of the developed world, I think you can add that risk-on appetite back in," Stone said.