Stock Market Forecast – Stocks Drop Led Lower by Energy Shares

US stocks dropped on Thursday as weaker than expected durable goods orders, weighed on prices. Stocks were led down by Energy shares following a worse than expected inventory report. Sectors were mixed, with Utilities the best performer. Over the last month, technology shares have been the best performer, rising 13%. Communications services have been the worst performer rising 2% over the past month. Despite the pullback in shares, yields remain buoyed. This comes a day after a dovish FOMC meeting minutes which help initially buoy stocks on Wednesday.

Nike Share Drop on Zion Disaster

Nike Shares tumbled 2% on the open following Wednesday’s sneaker blowout. Zion Williamson, Duke Universities star basketball player blew out a sneaker and hurt his knee in the first 35 seconds of Wednesday’s game against North Caroline. The blowout generated a scare for the company who sponsored the Duke star’s sneakers. Nike shares rebounded into the close.

Energy Shares Drop on Inventory Data

The Department of Energy reported a larger than expected build in stockpiles. Crude oil inventories rose by 3.7 million barrels from the previous week. Expectations were for a rise of 2.5 million barrels. Gasoline inventories decreased by 1.5 million barrels last week which was in line with expectations. Distillate fuel inventories decreased by 1.5 million barrels last week which was also in line with expectations. Total commercial petroleum inventories decreased last week by 2.5 million barrels last week.

What was concerning was the decline in demand. Total product demand over the last month averaged 20.6 million barrels per day, down by 0.1% from the same period last year. Gasoline demand also dropped averaging 9.0 million barrels per day, down by 0.4% from the same period last year.

The API Reports a Decline in Gasoline Inventories

The American Petroleum Institute reported a build in crude oil inventory of 1.26 million barrels for the week ending February 15, which came in smaller than expected as analysts forecast a build in crude oil inventories to the tune of 3.080 million barrels. This initially buoyed crude oil prices and energy shares but things went south following the EIA report.

US Data was Mixed

The labor department reported that jobless claims dropped 23,000 to 216,000 for the week ended February 16. Expectations were for a drop to 229,000. The larger than expected drop was related to the President’s Day holiday. The Commerce Department reported that Durable goods orders rose 1.2% in December which was the best result in the past four months, but much of the strength came from a surge in orders for aircraft. Expectations were for a climb of 1.5%. The December increase orders for durable goods followed a 1% rise in November. An increase in manufacturing is beneficial to natural gas usage.