(Reuters) – Wall Street dipped on Monday afternoon, reversing gains from earlier in the session, weighed down by healthcare stocks, while surging oil prices added to worries about rising costs for companies.
Oil prices rallied after Israeli Prime Minister Benjamin Netanyahu said that Iran had lied about not pursuing nuclear weapons and had continued to preserve and expand its nuclear weapons knowledge after signing a 2015 deal with global powers.
U.S. President Donald Trump has until May 12 to decide whether to restore sanctions on Iran that were lifted after a 2015 international agreement over its nuclear program.
Oil has risen this month to the highest since late 2014, driven by concerns over potential disruptions to Iranian crude flows, but analysts said the market is extremely sensitive to any developments on the nuclear deal and sanctions due to the high degree of uncertainty. [O/R]
The energy index .SPNY rallied 0.8 percent, with seven other S&P sectors in the red and three up 0.05 percent or less.
“You get a move in oil stocks, that’s moving the index,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
The industrials sector .SPLRCI, already under pressure after some marquee names warned of rising costs, was down 0.8 percent.
Arconic (ARNC.N) fell 19.8 percent after the aluminum products maker slashed its 2018 forecasts.
At 14:03 ET, the Dow Jones Industrial Average .DJI was down 12.42 points, or 0.05 percent, at 24,298.77, the S&P 500 .SPX was down 8.31 points, or 0.31 percent, at 2,661.60 and the Nasdaq Composite .IXIC was down 27.97 points, or 0.39 percent, at 7,091.83.
The healthcare sector .SPXHC dropped 0.9 percent.
Allergan (AGN.N) fell 4 percent after its chief executive officer said he was opposed to fundamental changes to the drug company’s business strategy.
Celgene (CELG.O) fell 5 percent. Morgan Stanley said it expects a delay of up to three years for Celgene’s key multiple sclerosis drug, ozanimod.
The markets had gotten off to a positive start as strong earnings reports from McDonald’s and a number of merger announcements lifted sentiment, while inflation worries were kept in check after tepid data on U.S. income and spending.
McDonald’s (MCD.N) jumped 4.5 percent after the world’s biggest fast food chain by revenue topped analysts’ forecasts for profit and sales.
T-Mobile (TMUS.O) agreed to buy Sprint (S.N) for $26 billion, but Sprint shares sank 15 percent, while T-Mobile tumbled 7.4 percent on worries whether the latest attempt to merge would past regulatory muster.
Data showed U.S. personal income rose 0.3 percent in March, compared with expectations of 0.4 percent. On the consumption side, personal spending in February was revised lower to 0.3 percent, instead of the previously reported 0.4 percent.
The data comes a day ahead of the start of the Federal Reserve’s meeting at which it is expected to maintain the benchmark U.S. interest rates.
“Price action can be sloppy going into the Fed meeting,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.
“It’s also the end of the month. The last day of the month can have some funky price action as people square up their books.”
Declining issues outnumbered advancers for a 1.18-to-1 ratio on the NYSE and for a 1.50-to-1 ratio on the Nasdaq.
The S&P index recorded 22 new 52-week highs and 10 new lows, while the Nasdaq recorded 48 new highs and 31 new lows.
Reporting by Sruthi Shankar in Bengaluru; Additional reporting by April Joyner in New York; Editing by Shounak Dasgupta