NEW YORK (AP) — An early rally in stock prices dissipated by late morning Wednesday following a retreat in oil prices. Yum Brands plunged after cutting its profit forecast for the year, citing weakness in China.
KEEPING SCORE: The Dow Jones industrial average was little changed at 16,793 as of 11:40 a.m. Eastern. It was up 173 points in early trading. The Standard & Poor’s 500 index was up a fraction at 1,980 and the Nasdaq composite fell eight points, or 0.2 percent, to 4,739.
OIL REBOUND: Oil prices were roughly flat after rallying earlier in the morning. The pullback came after the Energy Department reported that U.S. oil inventories rose by 3.1 million barrels last week and demand for oil fell slightly. Oil had rallied earlier on signs that producers were cutting back production, but a build in inventories shows there is still soft demand for crude.
Benchmark U.S. oil was down 16 cents, or 0.3 percent, to $48.39 a barrel in New York. It had been up 2 percent earlier. Brent Crude, which is used to price international oils, fell six cents to $52.39 a barrel in London.
Energy companies, which had been higher than the rest of the market, fell. The S&P 500’s energy sector was down 0.5 percent. It was up 2 percent earlier.
GROWTH DOWNGRADE: Another concern lingering on investors’ minds is whether the global economy is experiencing a downturn. Those fears were stoked by a report from the IMF that China’s slowdown and tumbling commodity prices will push global economic growth this year to the lowest level since the 2009 recession.
The fund forecasts that the world economy will grow 3.1 percent this year, down from its July forecast of 3.3 percent and also below the growth rate of 3.4 percent last year. The IMF expects Chinese economic growth to drop to a 25-year low of 6.8 percent this year, unchanged from its July forecast.
RUNNING AROUND LIKE A … : KFC parent company YUM Brands sank $15.70, or 19 percent, to $67.66 after the restaurant chain operator’s profits and sales missed analysts’ expectations. Sales in China, a major market for KFC, rose only 2 percent, far less than expected.
BONDS, CURRENCIES: Bond prices fell. The yield on the 10-year Treasury note rose to 2.06 percent. Currency trading was subdued. The euro edged down to $1.1228 and the dollar slipped to 120.01 yen.
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