Nine of ten sectors end in the green led by healthcare sector
U.S. stocks rebounded and closed with solid gains on Wednesday, 07 January 2014 as the S&P 500 recorded its first gain this year and snapped a five-day losing streak. The midweek advance occurred in two stages with the market climbing out of the gate amid upbeat action overseas. Indexes clawed back some of the hefty losses during the previous two session, which were triggered by sliding oil and a surging U.S. dollar.
The Dow Jones Industrial Average jumped 212.88 points, or 1.2%, to 17,584.52. The Nasdaq Composite ended the day up 57.73 points, or 1.3%, at 4,650.47. The S&P 500 closed 23.28 points or 1.2%, higher at 2,025.89.
The S&P 500 notched its morning high 30 minutes after the opening bell, but returned to its opening level two hours after the start of the session. Equity indices then charged to new highs after reports that German officials are expected to show willingness to restructure Greek debt. The report said that a debt write-off is not being discussed, but repayment terms may be eased.
Nine of ten sectors ended in the green with health care spending the entire session in the lead. On the downside, the telecom services sector represented the lone decliner, spending the entire session in negative territory. Apple and Microsoft posted solid gains while Google and IBM could not stay out of the red, resulting in daylong underperformance from the technology sector.
Elsewhere, the energy sector was among the early leaders, but finished the day just north of its low. For its part, crude oil alternated between gains and losses before ending the pit session higher.
The afternoon release of the minutes from the latest meeting of the Federal Reserve's Open Market Committee showed the members are considering an interest rate hike, but are worried about elements that could thwart the modest U.S. economic recovery. The market place deemed the FOMC minutes as a non-event.
The U.S. dollar index continues on its bullish rampage, hitting another 10-year high overnight as prices traded sharply higher on the day. The Euro currency slumped to a nine-year low versus the greenback on Wednesday.
In overnight news, consumer price inflation in the European Union fell by 0.2% in December, on an annual basis, which is the first decline on an annual basis since 2009. This news further advances notion the European Central Bank will implement quantitative easing of its monetary policy sooner rather than later. The ECB holds its next regular meeting on January 22.
Germany held a note auction (Schatz) on Wednesday that fetched a record low and average yield of negative .011%. Demand was termed strong. This news is another clue of the keener anxiety in the market place at present, regarding the overall financial and economic health of the European Union.
On the economic front, the ADP employment report served as an appetizer for Friday's nonfarm-payrolls report, while the trade-balance numbers for November were released 15 minutes later. Wednesday afternoon brought a look at the Federal Open Market Committee minutes from mid-December.
The ADP National Employment Report revealed that employment in the nonfarm private business sector rose 241K in December while the consensus expected an increase of 230K. The November reading was revised up to 227,000 from 208,000. The U.S. trade deficit declined to $39.00 billion in November from a downwardly revised $42.20 billion (from $43.40 billion) in October while the consensus expected a decline to $41.80 billion. That was the smallest trade deficit since December 2013 (-$37.40 billion).
The MBA Mortgage Index, which was not reported last week, rose 11.1%, but fell 9.1% over the two-week period.
Participation was just short of recent averages with 758 million shares changing hands at the NYSE floor.
Bullion prices ended the U.S. day session moderately lower on Wednesday, 07 January 2015 at Comex. A sharply higher U.S. dollar index was also a negative outside market force working against the precious metals. Gold snapped a three-session winning streak on Wednesday as a rebound in equities lured investors away. Gold for February delivery fell $8.70, or 0.7%, to $1,210.70 an ounce. March silver shed 9 cents, or 0.5%, to $16.54 an ounce.
U.S. crude oil rose on Wednesday, 07 Jnauary 2014 at Nymex snapping a four-session losing streak after a dip below $47 a barrel earlier in the day. Earlier Wednesday, a weekly U.S. inventories report showed a surprise drop in crude supplies. The report, however, also showed bearish supply increases for gasoline and distillates, which include heating oil.
Light, sweet crude for February delivery rose 72 cents, or 1.5%, to settle at $48.65 a barrel on the New York Mercantile Exchange. The contract had traded as low as $46.83 earlier, extending a 4.2% drop on Tuesday that left crude oil at its lowest since April 2009.
The latest weekly inventory report showed that U.S. crude inventories declined by 3.1 million barrels in the week ended 02 January 2015. Market had expected supplies to increase by 380,000 barrels. Gasoline inventories rose by 8.1 million barrels, while supplies of distillates rose by 11.2 million barrels. Market had expected gasoline stocks to increase by 2.25 million barrels and distillate stocks to increase by 2.06 million barrels. It had earlier briefly dropped below the $50-a-barrel mark for the first time since May 2009.
Tomorrow, the Challenger Job Cuts report for December will be released at 7:30 ET while weekly Initial Claims will be reported at 8:30 ET (consensus 290K). The day's data will be topped off with the November Consumer Credit report (consensus $15.00 billion), which is slated for a 14:00 ET release.
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