Renewed sell-off in oil once again hit investor confidence
US stocks ended with strong losses on Monday, 12 January 2015. The U.S. stock market ended Monday's session with losses for the second straight trading day, as a renewed sell-off in oil once again hit investor confidence ahead of the start of fourth-quarter earnings season..
The Dow Jones Industrial Average dropped 96.53 points, or 0.5%, to 17,640.84. The Nasdaq Composite ended the day down 39.36 points, or 0.8%, at 4,664.71.U.S. The S&P 500 closed down 16.52 points, or 0.8%, at 2,028.29.
Nine out of 10 main sectors finished lower led by energy and technology sectors.Telecoms were the only bright spot, ending higher. Chevron and Exxon Mobil led losing stocks, both down about 2%.
Equity indices opened the trading day with slim gains that evaporated during the first few minutes of the session.
Big losses in Apple dragged the Nasdaq lower, in spite of a string of announced mergers and acquisitions among biotechnology companies. Meanwhile, as investors turned away from equities, havens such as government bonds and gold rallied. The 10-year Treasury yield hich moves inversely to prices, fell 3 basis points to 1.91%.
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Alcoa kicked off the fourth-quarter season with better-than-expected results. Shares ralled in after-hours trade Monday, after the aluminum giant posted profit and sales that rose more than expected.
In the merger news today, shares of Foundation Medicine nearly doubled to $46.74 after Roche Holding said it would pay $1.03 billion for up to a 56.3% stake in the maker of molecular-diagnostics tests. Roche will pay $50 a share, a 109% premium over Foundation's closing price of $23.93 on Friday. Shares of NPS Pharmaceuticals jumped 8.2% after Dublin-based Shire said it would buy the specialty drug maker in a $5.2 billion deal.
In overnight news, the Organization for Economic Cooperation and Development reported economic growth in the coming months is likely to be stable in the U.S. and Canada, to slow in Germany, Italy Russia and the U.K., and to increase in China and India.
In another worrisome development on the deflation watch, copper prices fell to a 4.5-year low overnight. Recent weaker economic data coming out of major copper consumer China, and the plunging price of crude oil, have sunk the major industrial red metal.
The next major data point coming into focus for traders and investors is the 22 January 2015 meeting of the European Central Bank. Recent downbeat European Union economic data, 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.
Bullion prices ended the U.S. day session with solid gains on Monday, 12 January 2015 at Comex. Gold prices scored a four-week high on Monday. Safe-haven demand was featured amid recent stock market shakiness and lingering worries about the European Union's economic and financial health. Crude oil prices slumped again Monday and hit fresh 5.5-year lows. That once again spooked stock market investors, which in turn prompted a movement toward the safe-haven gold market. February Comex gold ended up $18.30 at $1,234.50 an ounce. March Comex silver last traded up $0.191 at $16.61 an ounce.
Crude Oil futures plunged on Monday, 12 January 2015 with the U.S. benchmark trading below the $46-a-barrel threshold for the first time in nearly six years after Goldman Sachs cut its crude outlook, predicting prices will remain low for a lengthy period.
West Texas Intermediate crude oil for February delivery fell $2.29, or 4.7%, to close at $46.07 a barrel after trading as low as $45.90. The close was the lowest since April 2009. The move followed a 0.9% loss during Friday's regular session on the New York Mercantile Exchange. WTI futures are down more than 57% from a June 2014 high of $107.26 a barrel.
Monday's drop follows some sharp cuts by Goldman Sachs to its oil-price projections. The bank's energy analysts revised down their three-month forecast for WTI crude to $41 a barrel from a previous estimate of $70. They see WTI at $39 a barrel in six months and $65 a barrel in a year, versus previous price forecasts of $75 and $80, respectively. They see Brent at $42 in three months, $43 in six months and $70 in 12 months versus previous estimates of $80, $86 and $90, respectively.
Today's participation was roughly in-line with average as nearly 760 million shares changed hands at the NYSE floor.
Tomorrow, the Job Openings and Labor Turnover Survey will be released at 10:00 ET while the Treasury Budget for December (consensus $3.00 billion) will be reported at 14:00 ET.
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