U.S. equities and stock exchange traded funds were flat Wednesday as crude oil prices declined and dragged on the energy sector.
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 unchanged Wednesday.
Meanwhile, West Texas Intermediate crude oil futures decreased 4.5% to $46.0 per barrel, and energy shares in the S&P 500 slipped 1.9%.
The energy market weakened Wednesday after the U.S. Energy Information Administration revealed that oil stockpiles increased for the first time in nine months and gasoline inventories were also higher, adding to concerns that U.S. drivers won’t help ease the ongoing glut over the summer driving season, the Wall Street Journal reports.
Market observers are also waiting on a number of potential risk-off catalysts this week, including a policy decision from the European Central Bank Thursday and former FBI director James Comey’s testimony in Washington. Any damaging disclosures from Comey’s testimony could depress momentum for the Trump administration’s pro-growth agenda.
“I think the Comey news led to an initial surprise but the rebound was equally swift,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co, told Reuters. “I’m not sure that unless Comey says something completely shocking or he suggests something that there’s no way the House can’t consider obstruction of justice … aside from that I don’t see his testimony as market moving.”
Additionally, early results for the United Kingdom general election will start coming in Thursday, with the latest polls indicating a tighter-than-expected race.
“If the Conservative party extends its majority, markets will be pretty calm, but anything less than that is going to have people worried about how we approach the Brexit negotiation,” Luke Hickmore, senior investment manager at Aberdeen Asset Management, told Reuters.
Nevertheless, many argue that signs of improvement in the global economy and corporate earnings will maintain market momentum and more than offset potential uncertain events ahead.
“As long as earnings are strong and the economic backdrop good, I’m still cautiously optimistic,” Susan Bao, portfolio manager at J.P. Morgan Asset Management, told the WSJ.
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