Stocks decline as storm pressures insurers and oil companies
NEW YORK (AP) — U.S. stocks are slipping Monday as insurance companies and oil drillers are falling while Tropical Storm Harvey continues to dump rain on the Texas Gulf Coast. The price of crude oil is tumbling and gas prices are rising. Health care companies are rising after hepatitis C and HIV drug maker Gilead Sciences agreed to buy cancer drug maker Kite Pharma for $11.9 billion.
KEEPING SCORE: In light trading, the Standard & Poor’s 500 index fell 1 point, or 0.1 percent, to 2,441 as of 3:15 p.m. Eastern time. The Dow Jones industrial average dipped 25 points, or 0.1 percent, to 21,787. The Nasdaq composite rose 11 points, or 0.2 percent, to 6,276. The Russell 2000 index of smaller-company stocks gained 3 points, or 0.2 percent, to 1,380. Most of the stocks on the New York Stock Exchange fell.
STORMY WEATHER: Tropical Storm Harvey continued to hit parts of Texas with historically heavy rains. The National Weather Service says some parts of Houston and its suburbs could get as much as 50 inches of rain before the storm abates, which isn’t expected to happen for days. The storm has shut down Texas’ oil and gas industry, and S&P Global analysts said about 2.2 million barrels per day of refining capacity was down or being shut down by Sunday.
THE QUOTE: The storm is likely to cause tens of billions of dollars in flood damage, and the effects in the Gulf region will be felt for years. Jack Ablin, chief investment officer for BMO Capital Markets, said elsewhere in the country, the storm and the flooding may raise many people’s insurance premiums as well as gas prices.
“There will be ripple effects that everyone is going to feel,” he said. Ablin added that the storm might affect interest rates as well, as the Federal Reserve might hesitate to raise interest rates soon if they think the storm will slow the economy.
ENERGY: Benchmark U.S. crude fell $1.30, or 2.7 percent, to $46.57 a barrel in New York. Brent crude, the international standard, lost 52 cents, or 1 percent, to $51.89 a barrel in London.
Companies that drill for oil and operate offshore oil rigs fell because of the shutdowns. Helmerich & Payne gave up $1.37, or 3.1 percent, to $43.41.
Wholesale gasoline futures rose 5 cents, or 2.7 percent, to $1.71 a gallon. Refining companies climbed, as they stand to benefit from higher gas prices. Marathon Petroleum advanced 76 cents, or 1.5 percent, to $52.48.
INSURANCE WOES: Insurance companies declined as investors worried that flooding from Harvey will lead to big losses. Travelers slumped $3.37, or 2.7 percent, to $123.10 and Progressive shed $1, or 2.1 percent, to $47.40.
KITE GOES SOARING: Gilead Sciences, which makes treatments for hepatitis C, HIV and other illnesses, will buy Kite Pharma for $11.9 billion, or $180 a share. Kite is studying treatments that can reprogram a patient’s immune cells to attack tumors, and it hopes to win approval this year for a blood cancer treatment. Kite is one of several companies researching CAR-T therapies, and Kite and Gilead hope it will win marketing approval later this year.
Kite Pharma stock jumped $39.18, or 28.2 percent, to $178.28 and Gilead gained 89 cents, or 1.2 percent, to $74.68.
AFTER THE STORM: Shoe retailer DSW lost $1.04, or 5.2 percent, to $19.01. Sporting goods company Finish Line declined 28 cents, or 2.6 percent, to $10.39 and Boot Barn retreated 23 cents, or 2.7 percent, to $8.34. Citi Investment Research analyst Kate McShane noted that all three companies have large numbers of stores in Texas. Some companies that may play a role in cleanup efforts after the storm traded higher. Those included environmental services company Clean Harbors, which rose $1.81, or 3.5 percent, to $53.20.
BOOKED HIS DEPARTURE: Expedia slumped after Dara Khosrowshahi, the travel booking site’s CEO, was offered the CEO role at Uber. Expedia Chairman Barry Diller said he thinks Khosrowshahi will accept the ride-hailing company’s offer. The AP reported Sunday that Uber had picked Khosrowshahi as its next CEO. Expedia’s stock lost $6.36, or 4.3 percent, to $142.90.
METALS: Gold rose $17.40, or 1.3 percent, to $1,315.30 an ounce, its highest price in 11 months. Silver gained 39 cents, or 2.3 percent, to $17.44 an ounce. Copper picked up 3 cents, or 1 percent, to $3.06 a pound.
OTHER ENERGY TRADING: Heating oil rose 1 cent to $1.64 a gallon. Natural gas added 3 cents to $2.93 per 1,000 cubic feet.
CURRENCIES: The euro rose to $1.1979 from $1.1888, and it is now at its highest level since the beginning of 2015. The European currency has been climbing recently because investors feel the European Central Bank isn’t going to take steps to keep the euro from getting stronger. That would make exports from European countries more expensive in other markets.
The dollar inched down to 109.09 yen from 109.24 yen late Friday.
BONDS: Bond prices edged higher. The yield on the 10-year Treasury note slipped to 2.16 percent from 2.17 percent.
OVERSEAS: The CAC 40 in France fell 0.5 percent and the DAX in Germany sank 0.4 percent. British markets were closed for a public holiday. Japan’s benchmark Nikkei 225 index took a negligible loss and the South Korean Kospi lost 0.4 percent. The Hang Seng in Hong Kong rose less than 0.1 percent.