Stocks mostly lower; materials, financials weigh; oil eyed – CNBC

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U.S. stocks traded in a narrow range Thursday, struggling for a third-straight day of gains, with oil trying to hold the psychologically key $50 level after earlier topping it for the first time since October.

WTI and Brent held near the flatline in midday trade after briefly dipping lower. Earlier, WTI topped $50 a barrel to hit its highest in intraday trade since early October.

“I think the fact oil was up over $50 and now in the low $49s is just (causing) a little bit of weakness. But that’s all noise,” said James Meyer, chief investment officer at Tower Bridge Advisors. He said stocks were pausing amid lack of major news as the major averages held near recent highs.

The S&P 500 and Dow Jones industrial average traded about 2 percent below their 52-week intraday highs, while the Nasdaq composite was more than 6 percent below its 52-week intraday high.

Katie Stockton, chief technical strategist at BTIG, said in a morning note that S&P futures were in short-term overbought territory.

“Overbought conditions can likely be sustained for 3-4 days before giving way to a pullback, but this would not be enough time for a breakout from the long-term downtrend channel to be confirmed,” she said. “We are watching for the VIX to push out of its trading range as an indication of increased downside volatility for equities.”

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded lower near 13.8.

All three major averages gave up opening gains to hold mostly lower in late-morning trade. Materials and financials were the greatest S&P laggards, while Microsoft and Apple traded lower.

Goldman Sachs had the greatest negative impact on the Dow Jones industrial average in midday trade.

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The U.S. dollar index pared earlier losses to trade about 0.1 percent. Commodity-related currencies were stronger against the dollar. The euro was near $1.117 and the yen traded near 109.8 yen against the greenback as of 12:18 p.m. ET.

U.S. stock index futures held slightly higher after early morning data reports.

Durable goods orders jumped 3.4 percent last month, the Commerce Department said. However, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 percent for a third-straight month after an upwardly revised 0.1 percent drop the prior month.

Initial jobless claims fell to a seasonally adjusted 268,000 for the week ended May 21.

Pending home sales rose 5.1 percent in April from the previous month to hit their highest level in a decade.

Federal Reserve Governor Jerome Powell, a voting member, said in a speech that an interest rate hike could be appropriate fairly soon, adding that he supports gradual hikes if data underpin forecasts of an improving economy. Fed Chair Janet Yellen is due to speak Friday afternoon as she receives an award at Harvard.

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Treasury yields held lower, with the 2-year yield around 0.88 percent and the 10-year yield around 1.84 percent in midday trade.

The Treasury is scheduled to hold a seven-year note auction in the afternoon.

St. Louis Federal Reserve President James Bullard said Thursday in a speech in Singapore that U.S. labor markets are relatively tight and may put upward pressure on inflation.

He noted while market-based forecasts of Fed policy see “almost no normalization,” the committee expects “data-dependent ‘slow-normalization.'”

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European stocks were closed slightly higher, with the pan-European STOXX 600 index gaining 0.1 percent. Asian stocks closed mostly higher, with the Nikkei 225 up about 0.1 percent and the Shanghai compsite about 0.3 percent higher.

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In midday trade, the Dow Jones industrial average fell 40 points, or 0.23 percent, to 17,811, with DuPont leading decliners and Pfizer the greatest advancer.

The S&P 500 fell 1 point, or 0.07 percent, to 2,088, with materials leading six sectors lower and telecommunications leading advancers.

The Nasdaq composite dropped less than a point, or 0.01 percent, to 4,894.

Advancers and decliners were about even on the New York Stock Exchange, with an exchange volume of 353 million and a composite volume of 1.53 billion in midday trade.

U.S. crude oil futures for July delivery slipped 9 cents to $49.46 a barrel on the New York Mercantile Exchange.

Gold futures for June delivery fell $3.30 to $1,220.50 an ounce as of 12:23 p.m. ET.

—Reuters contributed to this report.

On tap this week:

Thursday

Earnings: Palo Alto Networks, GameStop, Splunk

12:15 p.m. Fed Gov. Jerome Powell

1 p.m. $28 billion seven-year note auction

Friday

Earnings: JA Solar

8:30 a.m. Real GDP Q1 (second)

10 a.m. Consumer sentiment

1:15 p.m. Fed Chair Janet Yellen receives award, in Q&A at Harvard

*Planner subject to change.

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