Upbeat housing data at US and positive German data contribute to the rally
US stocks ended with moderate gains at Wall Street on Tuesday, 18 November 2014 at Wall Street. Trading action amounted to a relative rally for U.S. stocks. The major averages ended Tuesday near their highs with the S&P 500 registering its fifth consecutive advance.
The Dow Jones Industrial Average added 40 points, or 0.2%, to close at a record level of 17,687.82. The Dow has closed at record levels 26 times so far this year. The Nasdaq Composite outperformed other benchmarks, gaining 31.44 points, or 0.7%, to 4,702.44. The benchmark S&P 500 rose 10.48 points, or 0.5% to close at an all-time high of 2,051.80, marking the 43rd time the index closed in record territory this year.
Upbeat housing data, as well as news of a snap election in Japan and better-than-expected data from Germany might have contributed to the micro-rally. But overall optimism is also supported by the fact that global central banks remain highly accommodative, providing liquidity and keeping key interest rates low.
But the broad strength among chipmakers was not enough to bring the technology sector in line with the benchmark index as Google, IBM and Microsoft weighed.
Meanwhile, the remaining cyclical sectors registered gains across the board with materials leading the bunch. Fertilizer stocks like Mosaic and Potash underpinned the sector after world's largest potash miner, Uralkali, suspended operations due to elevated levels of brine.
In overnight news, European stock markets and the Euro currency rallied due in part to an upbeat German ZEW economic expectations index for November that handily beat market expectations. The index was forecast to come in at 0.9 but posted a reading of 11.5. In October the ZEW index came in at -3.6. European equities also saw buying support after European Central Bank chief Mario Draghi reiterated on Monday that the ECB could purchase EU government bonds (quantitative easing), if necessary.
In Japan, Prime Minister Abe called for snap elections as he announced a delay in a sales tax increase measure by 18 months. It was reported Monday that Japan's economy has slipped into recession following a third-quarter GDP report that showed contraction in Japan's economy. The Japanese stock market was lifted on the Abe news.
U.S. economic data released Tuesday included the producer price index, Treasury international capital data, and the NAHB housing market index. The PPI came in hotter than expected but the market place paid little attention to it.
Among economic data expected for the day at Wall Street, producer prices edged up 0.2% in October after declining 0.1%, while the consensus a decline of 0.2% The upside surprise in producer price growth was a result of a sharp 0.5% increase in prices of final demand for services, which was the largest increase since a similar 0.5% gain was recorded in July 2013. The services component was added to the PPI when the new methodology was introduced last year and is difficult to estimate. Final demand of finished goods, which was the headline PPI index under the previous methodology, fell 0.3% in October and was much closer to expectation.
The decline in crude and gasoline prices led to a 3.0% drop in the energy price index, while a 5.3% increase in meat prices led to a 1.0% overall increase in food in October Excluding food and energy, core prices rose 0.4% in October after reporting no change in September while the consensus expected an increase of 0.1%.
Separately, the NAHB Housing Market Index for November jumped to 58 from 54 while the consensus expected an uptick to 55.
Bullion prices jumped higher on Tuesday, 18 November 2014. Gold prices jumped on Tuesday as the dollar eased against major currencies amid economic and political news, and as equities continued to get stuck in a tight trading range. The dollar's fall against major currencies resulted in gold prices moving higher. The dollar underpins gold contract trading.
Gold for December delivery gained $13.60, or 1.2%, to settle at $1,197.10 an ounce. December silver tacked on 12 cents, or 0.7%, to $16.17 an ounce.
Crude-oil futures ended lower on Tuesday, 18 November 2014 at Nymex with investors largely uncertain about the outcome of the meeting of the Organization of the Petroleum Exporting Countries next week. A weak dollar kept the drop in prices under check.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at $75.34 a barrel, down $0.30 in the Globex electronic session. January Brent crude on London's ICE Futures exchange fell $0.35 to $78.96 a barrel.
Opinion is divided about the production policy and prices at the OPEC meeting on 27 November 2014. Markets have been speculating whether the 12-member oil cartel will cut its oil production to reduce oversupply and boost prices. Saudi Arabia, OPEC's largest oil producing member, has typically acted as the swing producer but may no longer take unilateral responsibility to undertake supply cuts.
Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while October Housing Starts (consensus 1.025 million) and Building Permits (consensus 1.04 million) will be reported at 8:30 ET. The day's data will be topped off with the 14:00 ET release of the FOMC Minutes from the October meeting.
Powered by Capital Market - Live News
