By Dan Strumpf
Stocks erased early gains to finish mostly lower Monday after a
slide in oil prices prompted heavy selling in energy shares.
The Dow Jones Industrial Average fell 24.28 points, or 0.1%, to
17366.24, reversing gains that earlier in the session had pushed
the index to a fresh intraday record of 17410.65.
The S&P 500, meanwhile, slipped 0.24 point to 2017.81. The
Nasdaq Composite Index rose 8.17, or 0.2%, to 4638.91.
Amid the slide in energy stocks, Dow components Chevron Corp.
lost $3.17, or 2.6%, to $116.78, and Exxon Mobil Corp. shed 1.45,
or 1.5%, to 95.26.
The pullback in stocks followed on the heels of an afternoon
slide in oil prices sparked by news that Saudi Arabia announced it
would cut the price of its crude to the U.S. Crude-oil futures shed
2.2% to settle at $78.78 a barrel, their lowest finish since June
2012. Prices have fallen 27% from recent highs in June.
The Saudis raised oil prices for customers in Asia, suggesting
the producer is trying to compete with low-cost U.S. shale oil,
observers said. Energy stocks in the S&P 500 lost 1.7%.
While falling oil prices are generally seen as an economic boon,
some investors are concerned that the deep slide of the past few
months could spell deflation, or declines in prices throughout the
economy that can mean economic trouble, said Viren Chandrasoma,
managing director of equity trading at Credit Suisse.
"The economic numbers are still looking good, but if oil keeps
going lower, you look at it from a macro implication and it's
deflationary," he said.
The afternoon slide in oil prices jolted Monday's otherwise
quiet market that saw many investors sitting tight ahead of
headlines expected later in the week.
On Tuesday, voters will go to the polls for midterm elections,
while on Friday the closely watched monthly employment report is
expected to show another month of solid jobs gains by U.S.
employers.
Friday's jobs report is predicted to show U.S. employers added
233,000 jobs last month, building on 248,000 new jobs added in
September, according to a Wall Street Journal survey of economists.
The unemployment rate is seen remaining steady at 5.9%.
Despite Monday's slide, the S&P 500 remains up 9.2% so far
this year. Last week, both the Dow and S&P 500 surged to record
highs after the Bank of Japan announced it would expand its recent
stimulus efforts. Such measures by central banks globally have been
credited with boosting risky assets such as stocks this year.
Meanwhile, investors remain cheered by data suggesting the U.S.
economy remains on solid footing.
On Monday, the Institute for Supply Management said its main
gauge for the factory sector rose to 59 last month from 56.6 in
September, beating expectations for a reading of 56.
"There are things going on that favor the U.S. over the rest of
the world," said Paul Zemsky, who helps manage about $30 billion in
global investments for Voya Investment Management. "
The Stoxx Europe 600 fell 0.8% after data showed only a modest
pickup in eurozone manufacturing activity in October.
The yield on the 10-year Treasury note rose slightly to 2.348%.
Yields rise as prices fall.
Corporate mergers lifted some shares. French advertising company
Publicis Groupe SA said it had entered a definitive agreement to
buy U.S.-based Sapient for $25 a share. Sapient shares leapt 7.28,
or 42%, to 24.60.
Health-care diagnostics company Laboratory Corp. of America
Holdings said Monday it agreed to buy Covance Inc. in a deal worth
about $6.1 billion. Covance also reported results for the most
recent quarter, including better-than-expected revenue. Laboratory
Corp. shares fell 8.06, or 7.4%, to 101.23, while shares of Covance
jumped 20.67, or 26%., to 100.57
Sysco Corp. shares fell 1.05, or 2.7%, to 37.49 after the
food-services distributor said fiscal first-quarter earnings fell
2.4% in part on expenses related to its pending acquisition by U.S.
Foods. The company said it doesn't expect the deal to close before
the first quarter of next year.
Write to Dan Strumpf at daniel.strumpf@wsj.com