Utilities and Energy sector stocks sold off
U.S. stocks ended Wednesday's choppy session essentially flat on 12 November 2014, as the main indexes struggled to stay in record territory. Equity indices began the day in negative territory, but the broad weakness was not brought upon by macroeconomic developments. The S&P 500 and Dow Jones Industrial Average snapped a five-day streak closing at a new high, as falling oil prices and heightened geopolitical risks turned investors cautious. European equities fell sharply as news of Russian weaponry entering Ukraine stoked fears of escalating violence in the region.
The Dow Jones Industrial Average dipped in and out of negative territory and closed 2.7 points weaker at 17,612.20. The Nasdaq Composite defied the trend and closed higher, adding 14.58 points, or 0.3%, to 4,675.13. The S&P 500 closed 1.46 points lower at 2,038.22, as utilities and energy sector stocks sold off.
Financials and energy sectors were largely responsible for the opening weakness as the pair accounts for nearly 30.0% of the entire market. The energy sector continued retreating throughout the day.
In overnight news, the German government auctioned a two-year note (the Schatz) for a negative yield Wednesday, which fetched -0.05%. Investors are paying the German government to hold their cash. This is yet another sign of the very low confidence in the European economy's health and its financial system.
Meantime, the Bank of England said Wednesday that an interest rate hike from the BOE will come later rather than sooner due to low inflation and lower U.K. economic growth expectations. Still, the BOE expects to make a rate hike in late 2015.
Economic data at Wall Street was limited to Wholesale Inventories and the MBA Mortgage Index. Wholesale inventories increased 0.3% in September after increasing a downwardly revised 0.6% (from 0.7%) in August, while the consensus expected an uptick of 0.2%. The weekly MBA Mortgage Index slipped 0.9% to follow last week's decline of 2.6%.
Treasuries notched their highs shortly before the start of the session, but retreated throughout the day. The 10-yr yield ended unchanged at 2.36%.
Bullion prices closed lower on Wednesday, 12 November 2014 at Comex giving up gains from the previous session, as the precious metals are expected to face more selling pressure in the coming days. The U.S. dollar index moved higher, increasing the pressure on gold.
Gold prices slid $3.90 to settle at $1,159.10 an ounce. December silver eased 6 cents at $15.62 an ounce.
Crude Oil prices settled at their lowest since 2011, on Wednesday, 12 November 2014 at Nymex as a drop in OPEC production last month nearly matched output increases from countries outside the cartel.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December fell 76 cents, or 1%, to finish at $77.18 a barrel. That's oil lowest settlement since 4 October 2011. New York-traded oil futures are down 22% so far this year. Crude futures prices have lost about 30% since a peak in June amid concerns about the supply glut and slackening global demand.
In its monthly oil market report released Wednesday, OPEC said its production in October dropped by 230,000 barrels of oil a day to 30.25 million barrels a day, with production decreases from Saudi Arabia, Angola, and Nigeria. Libyan production rose.
The recently red-hot U.S. dollar index had cooled off a bit this week on some profit taking. But the greenback rallied as the day progressed on Wednesday. Last week the dollar index hit a four-year high.
Participation was in-line with long-term averages but below recent trends with 702 million shares changing hands at the NYSE floor.
Tomorrow, weekly Initial Claims (consensus 280K) will be released at 8:30 ET while the Job Openings and Labor Turnover Survey will be reported at 10:00 ET. The day's data will be topped off with the 14:00 ET release of the Treasury Budget for October.
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