U.S. stock indexes are falling Tuesday afternoon and energy companies are sliding with the price of oil. Makers of household products are trading lower following mixed reports about consumer behavior in the U.S.
KEEPING SCORE: The Dow Jones industrial average dropped 101 points, or 0.6 percent, to 17,771 as of 3:34 p.m. Eastern time. The Standard & Poor’s 500 index fell 5 points, or 0.2 percent, to 2,094. The Nasdaq composite index rose 3 points, or 0.1 percent, to 4,936 as health stocks made small gains. Despite the losses, major U.S. indexes are wrapping up a strong month.
ENERGY: The oil minister of the United Arab Emirates said he is “optimistic” about the state of the energy market. Ministers from OPEC nations will meet in Vienna this week and the comments suggest there isn’t a lot of urgency to address a global supply glut.
Benchmark U.S. crude oil fell 23 cents to $49.10 a barrel in New York. Brent crude, used to price international oils, gave up 7 cents to $49.69 a barrel in London.
Chevron fell $1.21, or 1.2 percent, to $100.81 and Exxon Mobil shed $1.11, or 1.2 percent, to $88.90.
OIL PENNED IN: David Schiegoleit, managing director of investments for the private client reserve at U.S. Bank, said he thinks oil won’t go much higher unless the global economy really improves or major nations start spending more.
“We do see $50 as sort of high end,” he said.
Schiegoliet said he thinks oil prices will stay between $30 and $50 a barrel until then. The price of oil has almost doubled since early February, but it hasn’t closed above $50 a barrel since July.
EYE ON CONSUMERS: The Commerce Department said U.S. consumer spending rose 1 percent in April as purchases of cars and other long-lasting goods increased. Wages and salaries, the most important component of incomes, gained 0.5 percent. The report suggests the U.S. economy could pick up in the second quarter after six months of sluggish growth.
But economists at the Conference Board said consumer confidence fell for the second month in a row and reached its lowest level since November. The group said consumers are feeling cautious about business and job market conditions, and they anticipate little change in the months ahead. That was a surprise since a similar survey by the University of Michigan showed greater optimism among consumers.
CONSUMER GOODS: Companies that make household goods like food, drinks, cleaners and other everyday items fell in afternoon trading. Beer and wine maker Constellation Brands lost $4.45, or 2.8 percent, to $153.38 and Clorox gave up $1.23 to $128.47.
THE QUOTE: Erik Davidson, chief investment officer for Wells Fargo Private Bank, said the consumer spending report shows Americans are gradually spending more and getting over the shocks of the financial crisis and Great Recession.
“There’s probably never been a better time to be a consumer than right now,” Davidson said. He noted that the job market remains solid, wages are inching higher and a strong dollar is making goods produced overseas less expensive.
POWER DEAL: Westar Energy, the biggest utility company in Kansas, surged after Great Plains Energy agreed to buy it for $8.5 billion, or $60 per share in cash and stock. The deal will give Great Plains a total of 1.5 million customers in Kansas and Missouri. Westar climbed $3.81, or 7.2 percent, to $56.73 and Great Plains Energy slid $1.78, or 5.8 percent, to $29.22.
NOT READY FOR TAKEOFF: Boeing slumped after the U.S. Air Force announced new delays for the company’s KC-46 Pegasus Tanker, a midair refueling plane. Boeing lost $3.02, or 2.3 percent, to $126.20.
JAZZ IT UP: Jazz Pharmaceuticals says it will buy cancer drug developer Celator Pharmaceuticals for $30.25 per share, or $1.28 billion. Celator’s most advanced drug is Vyxeos, a potential treatment for acute myeloid leukemia.
Jazz gets most of its revenue from Xyrem, a drug used to treat side effects of narcolepsy, but it also makes cancer drugs. Celator soared $12.51, or 71.4 percent, to $30.04 and Jazz stock lost $1.02 to $151.07.
OVERSEAS: Germany’s DAX edged 0.7 percent lower, while France’s CAC 40 slipped 0.5 percent. Britain’s FTSE 100 was down 0.6 percent. Earlier in Asia, Japan’s benchmark Nikkei 225 closed 1 percent higher, while South Korea’s Kospi added 0.8 percent. Hong Kong’s Hang Seng climbed 0.9 percent.
OTHER ENERGY PRICES: Wholesale gasoline fell 2 cents to $1.61 a gallon. Heating oil was unchanged at $1.50 a gallon. Natural gas climbed 12 cents, or 5.5 percent, to $2.29 per 1,000 cubic feet.
METALS: Gold rose 80 cents to $1,217.50 an ounce. Silver fell 28 cents, or 1.7 percent, to $15.99 an ounce. Copper fell 2 cents to $2.10 per pound. That was the end of an eight-day losing streak for gold, which fell 6 percent in May.
BONDS AND CURRENCIES: Bond prices edged higher. The yield on the 10-year Treasury note slipped to 1.84 percent from 1.86 late Friday. The dollar strengthened to 110.59 yen from 110.38 yen. The euro rose to $1.1126 from $1.1114.