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.
European markets bounced back Thursday, with the pan-European Stoxx 600 Index more than 1 percent higher, helped by gains in banking stocks.
"We are seeing a very modest reversal from the stress of the last few days," said Ryan Larson, head of equity trading at RBC Global Asset Management. "The modest rebound that we're seeing in Europe is probably keeping futures at bay."
However, the STOXX Europe 600 Banks index was still tracking for a weekly decline of 5.5 percent and off nearly 35 percent for the year so far.
"When the (U.S. stock) market's pretending the world hasn't changed, all you have to do is look at the action in the European Bank stocks. It tells you the world did change," said Peter Boockvar, chief market analyst at The Lindsey Group.
"This earnings season is going to be the most important and tell all," Larson said. "We're looking to see if we can break the trend of this declining revenue growth."
The Dow Jones industrial average closed down 22.7 points, or 0.13 percent, at 17,895.8, with Verizon leading decliners and Goldman Sachs the top advancer. The Dow is slightly negative week to date, down 0.30 percent and pacing for its third negative week in four weeks.
The S&P 500 declined 1.83 points, or 0.09 percent, to 2,097.90, with utilities and telecoms leading five sectors lower and consumer discretionary the top advancer. The index is down 1.6 percent from its 52-week high on July 20 of last year.
The Nasdaq composite closed up 0.36 percent for its sixth positive day in seven days, ending 17.65 points higher at 4,876.81.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded higher near 15.05 after earlier falling to 14.41, its lowest level since June 9 when the VIX traded as low as 13.99.
Advancers were a touch ahead of decliners on the New York Stock Exchange, with an exchange volume of 864.44 million and a composite volume of 3.53 billion in afternoon trade.
Gold futures for August delivery settled down 0.4 percent at $1,362.10 per ounce. The precious metal is up 1.67 percent week to date.
On tap this week:
8:30 a.m. Employment report
3 p.m. Consumer credit
*Planner subject to change.