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Dow Eases From Highs as Energy Slumps; Cannabis Rally Goes Up in Smoke

Published 02/11/2021, 01:27 PM
Updated 02/11/2021, 01:36 PM
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By Yasin Ebrahim

Investing.com – The Dow eased from record highs Thursday, paced by slump in energy and financials on concerns over the demand outlook, though overall investor sentiment remains positive on stocks amid expectations for another round of stimulus.

The Dow Jones Industrial Average fell 0.30%, or 94 points after hitting an intraday high of 31,543.82. The S&P 500 was down 0.30%, while the Nasdaq Composite added 0.25%. 

Energy led the broader market decline as oil prices slipped on renewed demand concerns after OPEC lowered its forecast on global oil demand.

OPEC forecast oil demand to increase about 5.8 million barrels per day to just below 96.1 million bpd, down 0.1 million bpd from a previous forecast, citing downward revisions in the OECD region and the impact of extended lockdowns.

Halliburton  (NYSE:HAL), Apache (NASDAQ:APA), Marathon Oil Corporation (NYSE:MRO) were among the biggest decliners in the energy sector, each down by more than 4%.

Yet, Wall Street remains bullish on the global demand outlook. Goldman Sachs said earlier this week it expects global oil demand will recover by the end of 2022 and maintained its forecast for WTI to rise above $60 per barrel later this year. 

Financials also took a breather after racking up gains recently even as U.S. Treasury yields held steady.

Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), and Wells Fargo (NYSE:WFC) fell more 1%.

The day of weakness in cyclicals followed a smaller-than-expected decline in weekly jobless claims.

Economists, however, were quick to downplay the weaker headline number, noting that claims remained well below their January peak at a time when another potential round of stimulus will boost the labor market recovery.

"A declining pace of job destruction, furthermore, suggests that the U.S. labor market is on the mend after a second-round resurgence of the virus complicated the recovery near year-end with a further round of restrictions resulting in business closures and layoffs," Stifel said in a note.

Sentiment on stocks were also supported by ongoing decline in U.S. virus cases and a pick up the pace of the vaccine rollouts that will likely lead to a stronger-than-expected reopening.

The Reddit-led bid up in cannabis stocks a day earlier ran out of steam, with Tilray (NASDAQ:TLRY), Aphria (TSX:APHA) and Canopy Growth (TSX:WEED) down sharply. 

In other news, Bumble (NASDAQ:BMBL), the dating app company, soared on its debut, trading well above its IPO price of $43. 

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