Materials and energy sector stocks sold off sharply
US stocks registered moderate losses on Tuesday, 13 January 2015. The U.S. stock market ended Tuesday's volatile session, punctuated by massive triple-digit swings in the key benchmarks, slightly lower. Lack of confidence among investors as crude oil's unabated slide stoked fears of global deflation.
The Dow Jones Industrial Average dropped about 400 points from its session high, as two-thirds of its components ended with losses. The blue-chip index briefly ventured into positive territory for the year, but was back in the red year-to-date, losing 27.16 points, or 0.2%, to 17,613.68. The Nasdaq Composite closed 3.21 points lower or 0.1%, at 4,661.50. The S&P 500 fell for the third day. The index lost 5.22 points, or 0.3%, to 2,023.04.in a row.
Eight of its 10 main industry groupings finished lower. Materials and energy sector stocks sold off sharply.
The U.S. dollar index was higher and is near last week's 10-year high. While certainly not a positive for the raw commodity sector, the stronger greenback appears to be having less daily impact on raw commodity market prices, including the precious metals.
In overnight news, a report showed consumer inflation in the U.K. was at a 10-year low in December. The steep drop in crude oil prices is blamed for the U.K. inflation reading coming in at up 0.5% in December from up 1.0% in November, year-on-year. Meantime, Greece reported its consumer price index at minus 2.6% in December, year-on-year. Economic readings in the EU are already hinting at deflation knocking on the door.
The next major data point coming into focus for traders and investors is the 22 January 2015 meeting of the European Central Bank. The specter of price deflation and rhetoric coming from ECB officials suggest the central bank will soon initiate monetary stimulus in the forming of quantitative easing.
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U.S. economic data out Tuesday included the weekly Johnson Redbook and Goldman Sachs retail sales reports, the monthly Treasury budget statement, a report from the World Bank on world economic prospects, and the NFIB small business index. The Job Openings and Labor Turnover Survey showed that openings increased to 4.972 million from 4.830 million in November. The Treasury Budget for December showed a surplus of $1.90 billion, which followed the prior surplus of $53.20 billion. The consensus expected the surplus to hit $3.00 billion.
Alcoa ended lower by 2.3% despite reporting better than expected results for the quarter.
Elsewhere, the technology sector spent the day ahead of the broader market with Apple contributing to the relative strength. The largest sector component jumped 0.8% after Credit Suisse upgraded the stock to 'Outperform' from 'Neutral.' Other large cap sector members ended mixed with Google climbing 1.0% and Microsoft falling 0.5%.
Treasuries registered modest gains with the 10-yr yield slipping one basis point to 1.90%.
Today's participation was ahead of average with more than 850 million shares changing hands at the NYSE floor.
Bullion prices ended higher at Comex on Tuesday, 13 January 2015. Gold prices edged up on Tuesday, maintaining their upward momentum as investors remained cautious with earnings season underway. A day earlier, gold prices again capitalized on the rising volatility in the equity market and built on the prior week's 2.5% advance. Investors dumped stocks as oil continued to drop. Gold for February delivery rose $1.60, or 0.1%, to $1,234.40 an ounce. March silver climbed 59 cents, or 3.6%, to $17.16 an ounce.
Crude-oil futures ended under $46 a barrel on Tuesday, 13 January 2015 at Nymex as oil supply estimates and comments from the United Arab Emirates's oil minister about OPEC standing pat on oil production combined to stir oil-glut concerns. Economists and traders have been closely watching the Organization of the Petroleum Exporting Countries to see whether the cartel would budge on their decision to maintain oil production levels at 30 million barrels a year.
On the New York Mercantile Exchange, light, sweet crude for delivery in February fell 18 cents, or 0.4%, to $45.89 a barrel. That's the lowest settlement for oil since April 20, 2009, and one that extends oil's string of losses to a third straight session. Futures traded as low as $44.20 a barrel.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while December Retail Sales (consensus 0.1%) and December Import/Export Prices will cross the wires at 8:30 ET. The Business Inventories report for November (consensus 0.3%) will be reported at 10:00 ET while the Fed's January Beige Book will be released at 14:00 ET.
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