US Stock Market Overview – Stocks Drop Led Down by Energy

 

US stocks moved lower on Wednesday following several comments from heavy-hitting hedge fund managers. The outlook from the Federal Reserve chair was negative. Fed Chair Jerome Powell said in a statement to the Institute of International Economics, that economic output that has been countered with a swift policy response. The underlying message was that there was a need for more fiscal stimulus to avoid an economic collapse. US PPI declined more than expected to fall to a 5-year low. Oil inventories unexpectedly decline but the data was unable to buoy oil prices. All sectors in the S&P 500 index were lower, led down by Energy, healthcare was the best performer in a down tape.

US Producer Prices Drop Sharply

US producer prices fell more than expected in April, leading to the largest annual decline since 2015. The producer price index tumbled 1.3% last month after slipping 0.2% in March. Year over year through April, the PPI decreased 1.2%. That was the biggest decline since November 2015 and followed a 0.7% increase in March. Expectations were for the PPI to fall 0.5% in April and falling 0.2% on a year-on-year basis.

Inventories Unexpectedly Decline

Oil prices moved lower by 2% on Wednesday weighing on energy shares. This came despite an unexpected decline in crude oil inventories. According to the Energy Information Administration, US commercial crude oil inventories decreased by 0.7 million barrels from the previous week. At 531.5 million barrels, U.S. crude oil inventories are about 11% above the five year average for this time of year. Gasoline inventories decreased by 3.5 million barrels last week and are about 9% above the five year average for this time of year. Total commercial petroleum inventories decreased last week by 0.5 million barrels. While gasoline demand remains weak it is beginning to increase. Gasoline demand averaged 6.3 million barrels a day, down by 33.0% from the same period last year. This compares to last week’s demand figures which were down 40% year over year.