Wall St ends lower on mixed economic data, US-Iran tensions boost crude

By Stephen Culp

NEW YORK, Feb 19 (Reuters) – U.S. stocks moved modestly lower on Thursday following mixed economic data and Walmart’s disappointing forecast for the coming year, while signs of a sturdy labor market helped the dollar extend its upward climb. 

All three major U.S. stock indexes followed their European counterparts slightly lower, setting course to snap their three-session winning streaks, while mounting concerns over oil supply arising from a potential U.S.-Iran conflict helped bolster crude prices.

“Today (investors are) weighing some of the economic data and what Walmart’s earnings are saying in terms of the consumer,” said Chuck Carlson, CEO at Horizon Investment Services in Hammond, Indiana.

“I think investors are trying to grapple with trying to make a decision whether this rotation trade has legs or if it’s starting to run its course,” Carlson added, referring to the transition away from mega-cap tech-related momentum stocks. 

A spate of economic data showed a dip in jobless claims and U.S. trade data, which recorded its widest goods deficit on record as imports rebounded despite President Donald Trump’s tariffs.

Investor focus now turns to the Commerce Department’s much-anticipated Personal Consumption Expenditures report (PCE), which is expected to show inflation gained some heat in December.

The Dow Jones Industrial Average fell 267.50 points, or 0.54%, to 49,395.16, the S&P 500 fell 19.40 points, or 0.28%, to 6,861.91 and the Nasdaq Composite fell 70.90 points, or 0.31%, to 22,682.73. 

European shares pulled back from Wednesday’s record closing high as investors parsed a mixed bag of corporate earnings, particularly Airbus and iron ore producer Rio Tinto.

MSCI’s gauge of stocks across the globe fell 2.94 points, or 0.28%, to 1,046.75.

The pan-European STOXX 600 index fell 0.53%, while Europe’s broad FTSEurofirst 300 index fell 13.81 points, or 0.55%.

Emerging market stocks fell 0.06 points to 1,560.82. MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 0.29% to 799.88, while Japan’s Nikkei  rose 323.99 points, or 0.57%, to 57,467.83.

U.S.-IRAN TENSIONS SEND OIL PRICES HIGHER

Crude prices continued to rise, reaching a six-month high due to supply concerns arising from the growing possibility of a potential military conflict between the United States and Iran.

“It’s the elephant in the room, what’s going on in the Middle East,” Carlson said. “It certainly has ramifications for commodities, specifically oil and also gold.”

U.S. crude rose 1.90% to settle at $66.43 per barrel, while Brent settled at $71.66 per barrel, up 1.86% on the day.

The dollar edged higher as solid jobless claims data and minutes from the U.S. Federal Reserve appeared to show a divide among policymakers regarding the need to cut interest rates in the near term.

“The jobs market is okay, but there’s still a bit of job insecurity that’s out there,” Carlson added. “It gives the Fed a pause, trying to evaluate not just the numbers, but how job insecurity is affecting the rest of the economy.”

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.19% to 97.88, with the euro down 0.12% at $1.1768.

Against the Japanese yen, the dollar strengthened 0.17% to 155.09.

In cryptocurrencies, bitcoin gained 1.14% to $67,077.74. Ethereum rose 0.39% to $1,949.27.

U.S. Treasury yields were mixed as traders evaluated probable Fed policy, while the Treasury Department sold $9 billion in inflation-linked 30-year debt.

The yield on benchmark U.S. 10-year notes fell 0.6 basis points to 4.075%, from 4.081% late on Wednesday.

The 30-year bond yield  fell 0.2 basis points to 4.705% from 4.707% late on Wednesday.

But the 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 1.2 basis points to 3.472%, from 3.46% late on Wednesday.

Gold prices advanced as investors weighed mounting U.S.-Iran tensions against data hinting at labor market stability.

Spot gold rose 0.46% to $5,002.19 an ounce. U.S. gold futures fell 0.04% to $4,984.50 an ounce.

(Reporting by Stephen Culp; Additional reporting by Harry Robertson in London; Editing by Nia Williams and Deepa Babington)