Energy sector continues to drag down stocks
U.S stocks ended Thursday's mixed trading activity slightly higher on 13 November 2014 but a continued sell-off in energy stocks, due to falling oil prices, weighed on the S&P 500. The Dow Jones Industrial Average gyrated between gains and losses, but ended the session at a fresh record high recording its 25th record closing high this year.
The Dow Jones gained 40.59 points, or 0.2%, to 17,654.79, with nearly all of the gains coming from Wal-Mart Stores and Boeing. The S&P 500 eked out a 1-point gain to close at 2,039.33, as energy sector stocks weighed on the index. The Nasdaq Composite finished the day 5 points, or 0.1%, higher at 4,680.14.
Equity indices started the day on an upbeat note with the S&P 500 rising into fresh record territory with help from three sectors. Consumer discretionary, consumer staples and technology sectors rallied at the start and displayed relative strength throughout the day.
China industrial production in October was reported at up 7.7% year-on-year, which is below the 8% rise that was expected. This latest economic data falls in line with Chinese economic reports that have mostly missed to the downside of expectations. While China's economic readings are still the envy of major industrial countries, the robust growth seen in recent years is decelerating.
A European Central Bank survey showed that forecasters see this year's European Union overall inflation rate at 0.5% and see 2015 inflation coming in at 1.0%. They see EU inflation in 2016 at 1.4%. All these figures are still well below the 2.0% inflation rate the ECB has targeted.
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At Wall Street today, economic data included Initial Claims, JOLTs, and the Treasury Budget. The initial claims level increased to 290,000 from an unrevised 278,000 while the consensus expected an increase to 280,000. The Department of Labor said there were no special factors influencing the report .
The Job Openings and Labor Turnover Survey for September indicated job opening decreased to 4.735 million from 4.853 million. Separately, the Treasury Budget for October showed a deficit of $121.70 billion, which followed the prior deficit of $90.60 billion while the consensus expected the deficit to hit $122.00 billion.
Among stocks under focus, Halliburton is in talks to buy Baker Hughes. Baker Hughes surged 15.2%. The weakness in energy did not stop the Dow Jones Industrial Average from registering a modest gain since the index contains just two members of the energy sector. Chevron and ExxonMobil lost 1.0% and 0.8%, respectively. Outside of the two names, Caterpillar which relies heavily on China, was the only other laggard of note within the Dow. Shares of the stock ended lower by 1.9%.
In the tech sector, Apple, Intel and Microsoft added between 0.9% and 1.7% while Cisco Systems jumped 2.3% after beating earnings estimates on light guidance.
It was mixed finish for bullions on Thursday, 13 November 2014 at Comex. Gold drifted between small gains and small losses gain on Thursday, with its relationship to the thriving dollar continuing to keep any upside moves in check. Silver ended near unchanged mark.
Gold for December delivery rose $2.40 to settle at $1,161.50 an ounce. December silver was flat at $15.62 an ounce.
The U.S. Dollar index edged lower, which tends to give gold a boost, especially in this climate.
The World Gold Council reported Thursday that worldwide demand for gold dropped by 2% to 929.3 tons in the third quarter, amid expectations prices would fall further and on a strengthening dollar from the same reporting period last year. Chinese demand for gold jewelry dropped sharply in the third quarter, but demand from India rose sharply in the period.
Crude prices plunges at Nymex on Thursday, 13 November 2014. Saudi Arabia's oil minister left oil markets confused about what direction, if any, the kingdom and OPEC will take to stop oil prices' free fall, and oil futures traded at fresh multiyear lows on Thursday. The decline was so pronounced that a surprise larger-than-expected decline in U.S. crude inventories didn't move the needle, and New York-traded oil futures settled at their lowest since September 2010.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December fell $2.97, or 3.9%, to $74.21 a barrel. Futures had settled Wednesday at a three-year low.
OPEC reported Wednesday a slight decline in production from its member countries, but that drop was matched by increases in production elsewhere. Traders have been debating whether OPEC will announce a cut in production when it meets on 27 November in Vienna, boosting futures prices.
Earlier Thursday, the Energy Information Administration said U.S. oil supplies decreased 1.7 million barrels in the week ended 7 November 2014. Market had expected a decline of 500,000 barrels. Gasoline inventories rose by 1.8 million, and supplies of distillates decreased by 2.8 million barrels. Market had expected gasoline supplies to decrease 280,000 barrels and distillates stockpiles to decrease 1.6 million barrels. The report was a day late due to the Veterans Day holiday.
Treasuries climbed throughout the day, but backed away from highs into the close. The 10-yr yield fell three basis points to 2.35%.
Participation was a bit below long-term average as 690 million shares changed hands at the NYSE floor.
Tomorrow, the Retail Sales report for October (consensus 0.3%) and October Import/Export Prices will be released at 8:30 ET while the preliminary reading of the November Michigan Sentiment Index (consensus 87.5) and the September Business Inventories report (expected 0.2%) will cross the wires at 9:55 ET and 10:00 ET, respectively.
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