Disappointing results from J.P. Morgan Chase weigh on momentum
US stocks closed with losses for the fourth straight session on Wednesday, 14 January 2015 at Wall Street. A late-afternoon rally, triggered by a rebound in beaten-down oil prices, was not enough to lift U.S. stocks out of negative territory on Wednesday. The market's selloff began even before the official start of trading for U.S. stocks, on the heels of surprisingly weak December retail sales, which cast doubt on the pace of economic growth. Weighing on stocks in early trade were disappointing results from banking giant J.P. Morgan Chase, as a continued slide in commodity prices, as well the World Bank's downward revisions to its global-growth forecast.
The Dow Jones Industrial Average dropped as much as 300 points, but closed down 186.59 points, or 1.1%, lower at 17,427.09. The Nasdaq Composite ended the session down 22.18 points, or 0.5%, at 4,639.32.
Eight of 10 main industry groups ended lower. Financials and materials led losses, while utilities rallied. Twenty seven out thirty Dow components ended with losses. JPMorgan Chase was the top decliner on the index.
U.S. advance retail sales were reported Wednesday morning and came in at down 0.9% in December. That miss to the downside boosted gold prices, U.S. Treasury prices and pressured the U.S. stock indexes. Retail sales were expected to have risen by 0.1% in December. The data also raises the odds that the U.S. Federal Reserve may not raise interest rates as soon as it had hoped.
Another U.S. Federal Reserve official said Tuesday it would be a bad idea for the Fed to raise interest rates in 2015. Minneapolis Fed president Narayana Kocherlakota said a U.S. rate hike would impede the U.S. jobs market recovery.
European stock markets were also under pressure on Wednesday, amid a general risk-off trader and investor mentality, due to world economic growth worries. Late Tuesday the World Bank released its global economic outlook and said overall world growth would be 3% this year, up from 2.6% in 2014. However, the World Bank cut its 2015 forecast, which had earlier called for 3.4% world economic growth.
European stock markets were also pressured by a court ruling that ostensibly approved the quantitative easing move the European Central Bank will likely announce soon. However, selling pressure in European stocks was limited by an upbeat report on Euro zone industrial output released Wednesday.
Crude oil prices traded near steady Wednesday, after falling to a nearly six-year low on Tuesday, at $44.20 a barrel basis February Nymex futures. The downdraft in crude oil has been unsettling to much of the market place, including the stock markets.
The next major data point coming into focus for traders and investors is the 22 January 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.
Bullion prices ended little lower at Comex on Wednesday, 14 January 2015 at Comex after trading higher for most part earlier during the day. A downbeat U.S. economic report and a stock market sell-off prompted safe-haven buying interest in gold. A weaker U.S. dollar index on this day was also friendly for the precious metals bulls.
Gold for February delivery slipped 10 cents to settle at $1,234.50 an ounce. March silver fell 17 cents, or 1%, to $16.99 an ounce.
Crude oil prices rebounded on Wednesday, 14 Jnauary 2015 at Comex snapping a three-day losing streak and gaining the most in one day in two and a half years. Futures traded higher through a surprise increase in weekly inventories and a trouncing in U.S. equities, driven by surprise weakness in December retail sales. Gasoline and natural-gas futures also rallied.
Light, sweet crude futures for delivery in February ained $2.59, or 5.6%, to settle at $48.48 a barrel on the New York Mercantile Exchange. That was the largest one-day percentage gain since June 2012.
In the weekly inventory report, the EIA said that U.S. crude supplies rose by 5.4 million barrels in the week ended 9 January 2015. Market had expected supplies to fall by 400,000 barrels. Gasoline supplies rose 3.2 million barrels on the week, and supplies of distillates, which include heating oil, increased by 2.9 million. Market had expected gasoline stockpiles to rise by 2.7 million barrels, and distillate stocks to increase by 1.9 million barrels.
Treasuries jumped following this morning's data before surrendering a portion of their gains. The 10-yr yield fell six basis points to 1.84%. Also of note, the 30-yr yield ended at 2.45% (-3 bps), which represented the lowest close on record.
Today's participation was ahead of average with more than 900 million shares changing hands at the NYSE floor.
Tomorrow, weekly Initial Claims (consensus 290K), December PPI (consensus -0.4%), and January Empire Manufacturing Survey (expected 6.5) will be released at 8:30 ET while the Philadelphia Fed Survey for January (consensus 19.0) will cross at 10:00 ET.
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