Oil continues to drop and earnings dissapoint
U.S. stocks closed marginally higher on Tuesday, 19 January 2016 as the main indexes struggled to regain momentum following a renewed rout in oil prices. Today's session began sharply higher after a miss in China's Q4 GDP report invited speculation regarding potential stimulus from the People's Bank of China, but soon the realities of shrinking global growth and a persisting oil glut pressured the market lower. Meanwhile, declining earnings continued to weigh on investor sentiment.
The Dow Jones Industrial Average added 27.80 points, or 0.2%, to 16,015.88. The Nasdaq Composite ended the day down 11.47 points, or 0.3%, at 4,476.95. The S&P 500 closed a point higher at 1,881.36.
Last night, China released its Q4 GDP report, which showed that quarter-over-quarter GDP growth came in at 1.6% while year-over-year GDP growth was reported at 6.8%. Additionally, China reported below-consensus Industrial Production (5.9% vs 6.0%) and Retail Sales (11.1% vs 11.3%) in December. This was the slowest GDP reading since 2009 and prompted heavy speculation that the People's Bank of China would institute new stimulus measures to combat the growth issues.
There was more downbeat economic data coming out of the European Union on Tuesday. Euro zone consumer price inflation was pegged at zero percent in December, month-on-month, and up 0.2% year-on-year. Also, the closely watched German ZEW economic expectations index fell to 10.2 in January from 16.1 in December. However, the January reading was higher than expectations.
The IMF on Tuesday cut its global economic growth forecast number, citing slowing growth in China and concerns about emerging market financial contagion. The IMF pegged 2016 world economic growth at 3.4%, down 0.2% from its last estimate.
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The other key outside market crude oil is dropped to a 12-year low of $28.36 a barrel today. The International Energy Agency said oil prices could fall further this year due to the major glut of oil in the world market. The IEA said there is more than 1 million barrels a day of supply over demand being added to world oil stockpiles.
Among stocks under focus, Tiffany & Co slumped 5.1% after the jewelry retailer posted a holiday-period sales decline and cut its outlook. Twitter shares dropped 7% after the social network struggled with a service outage early Tuesday. UnitedHealth Group gained 3%, after the health insurer's adjusted fourth-quarter earnings beat views. Morgan Stanley fell 1.1%, relinquishing an earlier advance after the bank's quarterly profit topped expectations. Rival Bank of America shares fell 1.5% to a more than two-year low, reversing earlier gains of as much as 2.3%, after the after the banking giant missed fourth-quarter revenue expectations. Delta Air Lines initially dropped in premarket trade after the carrier's profit and revenue missed expectations, but shares closed 3.3% higher.
Crude oil prices fell on Tuesday, 19 January 2016 at Nymex with front-month futures settling below $29 a barrel, as traders bet that Iran's release from nuclear-related sanctions and the coming refinery maintenance season in the U.S. will worsen the glut of crude supplies. Brent prices, however, rebounded as some traders feared that Monday's decline to a fresh 12-year low was overdone.
February West Texas Intermediate crude fell by 96 cents, or 3.3%, to settle at $28.46 a barrel on the New York Mercantile Exchange. That was the lowest settlement for a front-month contract since September 2003. The February WTI contract expires Wednesday.
The Energy Information Administration expects Iran's production to rise from an average of 2.8 million barrels a day in 2015. It forecast Iran's output at 3.1 million barrels a day in 2016, and at almost 3.6 million barrels a day in 2017.
Bullion prices ended the U.S. day session mixed on Tuesday, 19 January 2016 at Comex on some profit taking. The yellow metal's price did finish up from the session low on some bargain hunting and as the U.S. dollar index backed down from its daily high.
February Comex gold was last down $1.30 at $1,089.30 an ounce. March Comex silver was last up $0.219 at $14.115 an ounce.
Today's economic data was limited to the NAHB Housing Market Index, which came in at 60, following a revised reading of 60 in December (from 61) (consensus 61.0).
Treasuries fell to their lows during the morning rally but were able to move higher during the market pullback. Ultimately, the 10-yr note settled just below its flat line with its yield higher by a basis point at 2.05%.
Today's session saw heavy volume with more than a billion shares changing hands at they NYSE floor.
Tomorrow's economic data includes the weekly MBA Mortgage Index, which will be released at 7:00 ET, while December CPI ( consensus 0.0%), December Core CPI (consensus +0.2%), December Housing Starts (consensus 1197k), and Building Permits (consensus 1200k) will cross the wires at 8:30 ET.
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