By Leslie Josephs
Big oil companies pulled the Dow Jones Industrial Average lower
on Friday, on disappointing earnings reports and a sign of
increased U.S. oil drilling despite a renewed slump in crude
prices.
The Dow Jones Industrial Average shed 56.12 points, or 0.3%, on
the day to 17689.86. The index was down from an intraday high of
17783.5. The S&P 500 reversed from modest gains earlier in the
session to fall 4.7 points 0.2% to 2103.84. The Nasdaq Composite
Index fell less than 0.1%, or 0.5 points to 5128.28.
On the other side of the Atlantic, the Stoxx Europe 600 rose
less than 0.1% to 396.37.
Shares of large U.S. oil companies, already pressured by
downbeat earnings reports, fell after oil-field services firm Baker
Hughes said on Friday afternoon that the number of active U.S. oil
rigs rose by five this week to 664, the second consecutive weekly
increase.
Oil futures prices fell after the data were released, with Nymex
crude settling at $47.12 a barrel, down 2.9%, or $1.40.
Exxon Mobil Corp., the biggest U.S. oil company earlier on
Friday reported a 52% decline in profit for its second quarter and
its stock price fell 4.6% to $79.21. Chevron shares were down 4.9%
at $88.48 on Friday, after the company reported $2.6 billion in
quarterly charges tied to lower oil prices.
Together the two companies' share-price drop shaved about 56
points off the Dow. "That should not surprise anyone," Randy
Frederick, managing director of trading and derivatives at Charles
Schwab, said of the oil companies' results.
Still, the Dow Industrials eked out a 0.4% gain in July, the
largest since May. The S&P 500 rose about 2% in the month, the
biggest monthly percentage gain since February.
Friday's losses were somewhat muted by a report that showed
paltry growth in U.S. wages, which cast some doubt over whether the
Federal Reserve would raise interest rates in the coming
months.
The U.S. employment-cost index, a measure of workers' wages and
benefits, rose a seasonally adjusted 0.2% in the second quarter
from the first quarter, the Labor Department reported. The gains
marked the smallest quarterly rise since record-keeping began in
1982, and fell below economists' expectations of a 0.6%
increase.
"I think what the markets are reading is that once again this
another one in the column for "no" [for a Fed rate rise] in
September," said Jeffrey Yu, head of single-stock derivatives
trading at UBS Group AG.
Even if the Fed were to raise rates by a quarter percentage
point, it wouldn't likely encourage investors to sell stocks and
pile into other asset classes like bonds, said Gordon Charlop,
managing director at Rosenblatt Securities. "What does a quarter
[percentage] point do? Does it mean I'm going to sell all my
equities? I don't think so," Mr. Charlop said. "It's like jumping
off a snake's belly."
Shares of Coca-Cola Enterprises Inc. rallied 12.4% at $51.08
following news of merger talks with Coke bottlers Coca-Cola Iberian
Partners and Germany's Coca-Cola Erfrischungsgetranke AG.
Shares of Hanesbrands Inc. dropped 9.11 % to $31.03 after the
apparel maker posted s econd-quarter sales below analyst
estimates.
The dollar weakened 0.5% against the common currency, as one
euro bought $1.0981 in late-afternoon trade.
Gold futures posted their steepest monthly decline since June
2013, after investors slashed gold holdings in anticipation of
higher U.S. interest rates. The most actively traded contract, for
December delivery, settled up $6.40, or 0.6%, at $1,095.10 a troy
ounce on the Comex division of the New York Mercantile
Exchange.
Write to Leslie Josephs at leslie.josephs@wsj.com