U.S. equities and stock exchange traded funds were on track to end a record-setting month on a weak note as financial stocks dragged on major indices.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were 0.2% lower Wednesday.
Financial companies in the S&P 500 declined 1.1% Wednesday after J.P. Morgan (NYSE: JPM) and Bank of America (NYSE: BAC) hinted at weak revenue in the current quarter. Nevertheless, U.S. equities remain hovering near record levels.
“There is a choppy sideways market due to the fact that fundamentals are largely unchanged and expectations of market friendly policies in the U.S. are being pushed to 2018,” Stephen Wood, chief market strategist, North America, Russell Investments, told Reuters.
Financials previously outperformed the broader market on bets of fiscal stimulus and banking deregulation under the Trump administration, but the sector has weakened in recent weeks on a diminished outlook in President Donald Trump’s ability to push through his initiatives as politics mire his agenda.
Further weighing on U.S. stocks, oil prices slipped to a three-week low as increased Libyan production fueled concerns that the Organization of Petroleum Exporting Countries’ output cuts were being undermined by several countries excluded in the deal.
“With oil also down, the thoughts of an economic slowdown start to come up in people’s minds and has created a pause in the market euphoria,” Andre Bakhos, managing director at Janlyn Capital, told Reuters.
Oil companies in the S&P 500 dipped 0.5% Wednesday while West Texas Intermediate crude oil futures decreased 2.6% to $48.4 per barrel and Brent crude was 3.0% lower to $50.3 per barrel.
Nevertheless, U.S. markets climbed in May on upbeat first-quarter corporate earnings and signs of a steadily improving global economy, despite falling commodity prices and rising political concerns.
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