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US shares fall on oil glut, Mylan biotech scare and after hours HP shock

Last updated: 16:52 24 Aug 2016 EDT, First published: 11:52 24 Aug 2016 EDT

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US shares closed lower on Wednesday after oil glut and housing data headwinds join a drop by biotech stocks and after-hours shock from HP.

The Nasdaq biotechnology index registered its biggest one-day drop since June 24 on Wednesday as pressure mounted on Mylan over an increase of the price of a life-saving drug.  Read more.

The Nasdaq biotech sector fell 3.6%, pulling the broader Nasdaq Composite down 1%.

Oil stocks suffered after US inventories shot up in the latest week and existing home sales fell more sharply in July than expected.

The S&P 500 bellwether index closed down 0.5% at 2,175, while the S&P Midcap 400 shed 0.7% to 1,560 and the S&P Smallcap 600 ended down 0.6% at 751.

The US oil benchmark West Texas Intermediate was down 2.8% at $46.77.

After hours, computer maker HP Inc (NYSE:HPQ), reported Street-beating third quarter earnings – but the post-hours share price was down 4.9% at $13.70 after the firm revealed a current quarter outlook that missed Wall Street expectations.

Palo Alto-based HP said it expects to post adjusted earnings, which exclude certain factors, of 34 to 37 cents a share in the current quarter, shy of Wall Street expectations for 40 cents.


Midsession

US stocks were soft at midsession on Wednesday after oil inventories surged and more housing data contradicted data earlier in the week.

The market bellwether S&P 500 index was down 0.3% at 2,180, led by oil group Freeport-McMoRan Inc (NYSE:FCX), down 6.1% to $11.25 on oil glut fears.

Next biggest faller was satnav maker Garmin Ltd (NYSE:GRMN) down 6% to $50.46 on a Goldman Sachs report that recommended investors sell the stock due to the competitive threat from new Apple and Fitbitproducts later this year. Broker Goldman said it lowered its rating on the company to sell from neutral.

The S&P Midcap 400 was down 0.3% to 1,565 and led lower by retailer Guess Inc (NYSE:GES), down 6.2% to $14.91. Considered a beaten-down stock of late, it was lower a day before its earnings report.

The S&P Smallcap 600 was down 0.3% to 754.

US crude and gasoline inventories both logged surprise increases last week, new data on Wednesday showed, sending the price of oil deeper into negative territory.

US crude stocks rose by 2.5m barrels last week, the Energy Department said, compared with expectations of a 495,000 barrel draw. Meanwhile, gasoline inventories ticked higher by 36,000 barrels, missing forecasts for a 1.3m barrel decline.

The US oil benchmark WTI was down 3% to $46.66.

Meanwhile, sales of previously-owned US homes fell more than expected last month, as lower inventories and higher prices put pressure on the property market.

Existing home sales fell 3.2% in July from the month prior to an annualised rate of 5.39mln, the National Association of Realtors said. That missed Wall Street estimates of a 1.1% decline.

That contrasts with data on Tuesday which showed new homes sales topping 2007 highs.


Open

Like UK big caps , Wall Street shares started lower on Wednesday as traders became jittery ahead of the Fed's Janet Yellen speech on Friday while oil stockpiles rose.

Additional crude inventories reignited fears of oversupply and that a production freeze won’t happen.

In early deals on Wall Street, the Dow Jones was down 0.15% to 18,519, while the S&P500 shed 0.13% to 2,184.

The tech-heavy Nasdaq exchange lost 0.05% to stand at 5,256.

US crude fell 1.10% to stand at US$47.54 per barrel.

In company news, Lannett Corp (NYSE:LCI) rallied over 10% as the drug maker released fourth quarter numbers, which were better than the Street had expected.

 


US shares are poised to head higher with a  clutch of  retail results and oil data in focus later.

The US Energy Information Administration is reporting official weekly crude oil inventory data, which means the level of stockpiles and how much of the commodity has been drawn.

It comes as the oil price has been under pressure this week and today, West Texas Intermediate - the US benchmark is down 1.54%  to US$47.36.

Yesterday, the main indices closed higher but it was the mid- and small-caps that managed to secure fresh record intraday highs.

The S&P Midcap 400 closed up 0.5% at 1,571 after notching up a record high of 1,575, while the S&P Smallcap 600 closed up 0.7% at 756 having earlier hit a record high at 757.

The main S&P500  closed 4.26 up at 2,186, while the Nasdaq added 15 to 5,260. The benchmark Dow Jones Industrial Index added almost 18 points to 18,547.

In futures trading today, the Dow Jones is up around six points; the Nasdaq is up over four and the S&P500 gained 1.5.

In London, the FTSE100 is currently down 0.23% and the German DAX and French CAC40 are both higher.

Clothing retailer Express (NYSE: EXPR)  is expected to post its quarterly results ahead of the open, while others, including Calvin Klein parent PVH (NYSE: PVH), and Guess (NYSE: GES) will report after market close.

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