US Stock Market Overview – Stocks Slide Led Lower by Energy Shares, Utilities Buck the Trend

CPI comes out in line with expectations
David Becker
S&P 500 daily chart, June 11, 2019

US stocks moved lower on Wednesday, driven down by energy shares, as crude oil prices tumbled more than 4%. This followed a larger than expected build in commercial petroleum stocks. Inflation on the consumer level was relatively tame, allowing US yields to slip. Facebook announced that the company had uncovered emails that appear to connect Chief Executive Mark Zuckerberg to potentially problematic privacy practices at the company. Sectors were mixed, with Utilities bucking the trend in a down tape.

Petroleum Inventories Rose More than Expected

US crude oil inventories increased by 2.2 million barrels from the previous week, which was larger than expected. Gasoline inventories increased by 0.8 million barrels last week and are about 2% above the five year average for this time of year. Distillate fuel inventories, which include diesel and heating oil decreased by 1.0 million barrels last week and are about 4% below the five year average for this time of year. Total commercial petroleum inventories increased last week by 9.3 million barrels last week. T

Demand  is lower. Total products demand over the last month averaged 20.4 million barrels per day, down by 0.1% from the same period last year. During the past month gasoline demand averaged 9.5 million barrels per day, down by 0.2% from the same period last year. Distillate fuel demand averaged 4.0 million barrels per day over the past four weeks, down by 0.2% from the same period last year. Jet fuel demand was up 5.4% compared with the same four-week period last year.

US Inflation Edges Higher

The Labor Department reported on Wednesday that US CPI edged up 0.1% in May as a rebound in the cost of food was offset by cheaper gasoline. The CPI gained 0.3% in April. On a year over year basis,  in May, the CPI increased 1.8%, slowing from April’s 1.9% gain. Expectations were for CPI to rise 0.1% in May and 1.9% year over year.

Core CPI, which excludes food and energy components, nudged up 0.1% for the fourth straight month. Core CPI was held down by a sharp decline in the prices of used cars and trucks as well as motor vehicle insurance. Year over year in May, the so-called core CPI rose 2.0% after advancing 2.1% in April. Gasoline prices fell 0.5% in May after rising 5.7% in April. Food prices rebounded 0.3% in May after dipping 0.1% in the prior month. Food consumed at home increased 0.3% last month. Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, increased 0.3% in May after rising 0.3% in April.

Facebook Tumbles as Emails are Uncovered

Facebook announced that the company had uncovered emails that appear to connect Chief Executive Mark Zuckerberg to potentially problematic privacy practices at the company, according to people familiar with the matter. Within the company, the unearthing of the emails in the process of responding to a continuing federal privacy investigation has raised concerns that they would be harmful to Facebook.

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