Stocks wobble as oil falls back, Wall Street keeps churning

The Dow Jones Industrial Average was up 5 points, or less than 0.1%, at 32,425, as of 12:40 p.m. Eastern time. The Russell 2000 index of smaller stocks was doing better than most of the market with a 1.4% gain.

Stocks of energy producers dropped to the market's sharpest losses after the price of U.S. oil slumped 4.9% to $58.21 per barrel. Diamondback Energy fell 1.3%, and Halliburton dropped 1.7%.

Oil's price was giving back a big portion of its 6% jump from a day earlier, when it climbed above $61 per barrel after a skyscraper-sized cargo ship wedged itself across Egypt’s Suez Canal and raised worries about supply disruptions.

Yields in the Treasury market also continued to ease after the 10-year yield spiked above 1.70% last week, its highest level since before the pandemic started. The 10-year Treasury yield, which helps set rates for all kinds of loans, remained unchanged at 1.61% from late Wednesday.

The decline came despite a report showing that the number of workers filing for unemployment benefits eased to its lowest level since before the pandemic erupted a year ago. Another report said the U.S. economy grew at a faster pace at the end of 2020 than earlier estimated.

Moves in Treasury yields have been a major reason for the swings in the stock market in recent weeks. When bonds pay more in interest, they make investors less willing to pay high prices for stocks. Businesses that are asking investors to wait many years for their big profits to begin rolling in are affected even more.

Technology stocks have borne the brunt of the pain of higher interest rates, and they’re also among the biggest companies in the market in terms of value.

Investors have been moving money away from expensive tech stocks as part of a broader shift to stocks tied more closely to economic growth. There's a good chance the recovery could be surprisingly strong with little interference from the Federal Reserve, said Andrew Slimmon, portfolio manager at Morgan Stanley Investment Management.

“There is a very clear message that the Fed is going to sit back and let the economy grow at a hotter rate because their number one priority is unemployment,” he said. “That means there’s a good chance the economy overshoots.”

Big tech stocks swung back and forth in earlier in trading and were nearly evenly split within the broader S&P 500 index. Microsoft fell 1.5% and Cisco rose 1.6%.

Treasury yields have been broadly rising with expectations for stronger economic growth and the inflation that may accompany it. The market got a particularly hard jolt a month ago, when an auction of seven-year Treasurys found relatively few bidders. Analysts called it a “horrifically bad” auction, and it helped send yields jumping. A bond’s yield rises when its price drops.

Another auction of seven-year Treasurys is scheduled for later in the day.

In European stock markets, Germany’s DAX lost 0.1%, and the French CAC 40 fell 0.1%. The FTSE 100 in London dropped 0.7%.

In Asia, Japan’s Nikkei 225 rose 1.1%, and South Korea’s Kospi added 0.4%. Hong Kong’s Hang Seng pulled back by 0.1%, and stocks in Shanghai slipped 0.1%.