People pass the New York Stock Exchange on Tuesday, May 28, 2024, in New York. Shares are mostly lower in Europe and Asia after U.S. markets were closed for the Memorial Day holiday. (AP Photo/Peter Morgan, File)
NEW YORK (AP) – Stocks are pulling back and trimming their gains for May. The S&P 500 was 0.8% lower in early trading Wednesday and edging further below its record set last week. The Dow Jones Industrial Average was down 361 points, and the Nasdaq composite was 0.7% lower. American Airlines Group sank 11.5%, leading a slump for airline stocks, after cutting its profit forecast. ConocoPhillips fell 1.5% after saying it would buy Marathon Oil. Marathon Oil jumped 10%. Advance Auto Parts sank 9.3% after its results came up just shy of analysts’ expectations. Another tick higher in longer-term Treasury yields was also weighing on the market.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Wall Street was poised to open with losses on Wednesday as some major dealmaking and a handful of earnings reports fill the news void until Friday’s latest inflation report.
Futures for the S&P 500 and the Dow Jones Industrial Average each tumbled 0.6% before the bell.
ConocoPhillips said that it is buying Marathon Oil in an all-stock deal valued at approximately $17.1 billion, or $22.5 billion including debt. Marathon shares jumped more than 7%. The deal is expected to close in the fourth quarter and still needs approval from Marathon shareholders.
Global pharmaceutical giant Merck is buying privately held ophthalmology biotech EyeBio in a deal valued at up to $3 billion, according to EyeBio lead investor Jeito Capital. Merck shares were flat in premarket trading.
American Airlines skidded 8.6% before the bell after it slashed its profit guidance and announced that Vasu Raja, its chief commercial officer, was leaving the company in June.
Dick’s Sporting Goods rose 7.2% after it reported better earnings than analysts expected and raised its full-year profit guidance. Pet food and supply company Chewy also easily beat Wall Street’s first-quarter profit targets and its shares climbed close to 6%.
There’s little economic news to move markets until Friday, when the government releases its latest monthly report on spending by households and the incomes that they earned. The consumer spending report also includes a calculation of inflation for April that the Federal Reserve prefers to use.
The Fed has been holding the federal funds rate at the highest level in more than two decades in hopes of grinding down the economy and investment prices enough to get the annual inflation rate down to its 2% target. If it leaves rates too high for too long, it could kneecap the job market and overall economy. But a premature cut to interest rates could allow inflation to reaccelerate and inflict even more pain on U.S. households.
Elsewhere, in Europe at midday, France’s CAC 40 slipped 1.1%, Britain’s FTSE was down 0.4% and Germany’s DAX declined 0.8%.
In Asian trading, Japan’s benchmark Nikkei 225 shed 0.8% to 38,556.87. Australia’s S&P/ASX 200 dipped 1.3% to 7,665.60. South Korea’s Kospi lost 1.7% to 2,677.30. Hong Kong’s Hang Seng slipped 1.8% to 18,477.01, while the Shanghai Composite was little changed, edging up less than 0.1% to 3,111.02.
The International Monetary Fund raised its forecast for China’s economic outlook, saying it expects the No. 2 economy to grow at a 5% annual pace this year. But it also warned that consumer-friendly reforms are needed to sustain strong, high-quality growth.
In other trading, benchmark U.S. crude rose 61 cents to $80.44 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, added 57 cents to $84.51 a barrel.
In currency trading, the U.S. dollar rose to 157.28 from 157.12 Japanese yen. The euro cost $1.0848, down from $1.0857.
On Tuesday, the S&P 500 closed little changed, just below its record set a week ago. The Dow Jones Industrial Average fell 0.6%, while gains in technology stocks pushed the Nasdaq composite up 0.6% to another all-time high.
