Seven out of 10 sectors closed higher led by energy and telecommunications sectors
U.S. stocks finish higher on Thursday, 21 January 2016 as a sharp rally in oil prices helped the main indices rebound from Wednesday's rout, which had pushed them below their August lows.
The Dow Jones Industrial Average gained 115.74 points, or 0.7%, to 15,882.48. The Nasdaq Composite closed virtually unchanged at 4,472.06 after briefly dipping into negative territory. The S&P 500 rose 9.65 points, or 0.5%, to settle at 1,868.98.
Seven out of 10 sectors closed higher. Energy, telecommunications and consumer-discretionary stocks led the gains.
Asian stock markets were lower overnight, following the sell-off in U.S. stock market on Wednesday that drove the major indexes to multi-month lows. European stock markets were firmer as traders and investors awaited the European Central Bank's regular monetary policy meeting Thursday. The ECB left its monetary policy unchanged Thursday, which was expected. However, ECB President Mario Draghi at his press conference laid out very dovish remarks that hinted the ECB can and will implement more quantitative easing of monetary policy, possibly as soon as March. This news sunk the Euro currency and boosted the U.S. dollar index, and also lifted the U.S. stock market.
Crude oil prices that hit a 12-year low on Wednesday saw a solid corrective rebound Thursday. Still, there are growing concerns that many companies in the oil industry, and the banks that have outstanding loans to those companies, are in big trouble and could default on obligations, to create a contagion effect.
Worries about slowing economic growth in China, the world's second-largest economy, are also weighing on stock markets around the globe. There are also worries that heavy capital outflows from China will further damage China's economy.
Economic data at Wall Street on Thursday included weekly initial/continuing claims and the January Philadelphia Fed Survey. Initial claims for the week ending 16 January were higher than expected, rising 10,000 to 293,000 (consensus 280,000). There were no special factors influencing initial claims, which have been bounded between 250,000 and 300,000 since July 2014. The latest reading, however, is the highest level of claims since the first week of July 2015. With the latest reading, the four-week moving average for initial claims increased by 6,500 to 285,000, which is the highest average since July 11, 2015. Continuing claims for the week ending January 9 were lower than expected, falling by 56,000 to 2.208 million.
Separately, the Philadelphia Fed Index for January checked in at -3.5 versus -10.2 in December.
Among stocks under focus, Southwest Airlines rose 0.5% after the company said fourth-quarter profit nearly tripled on cheap fuel and fleet modernization. Travelers Companies shares declined 0.9% after it reported profit that beat analyst expectations, but revenue fell short. Verizon Communications rose 3.2% as the mobile-services provider posted adjusted earnings that came in higher than expected.
Bullion prices ended lower on Thursday, 21 January 2016 at Comex. Gold ended the U.S. day session moderately lower Thursday, amid mild profit-taking pressure following recent gains. A bounce in the U.S. stock market today also limited buying interest in the safe-haven precious metal.
Crude oil futures settled with a gain of more than 4% on Thursday, 21 January 2016 rebounding on the back of oversold conditions, as reports of attacks on Libyan oil terminals reminded the market of the risks to supplies in the Middle East. Advances for oil came despite a hefty increase in weekly U.S. crude inventories. The natural-gas market, meanwhile, rose even as its own supply data revealed a smaller-than-expected weekly decline.
March West Texas Intermediate crude jumped $1.18, or 4.2%, to settle at $29.53 a barrel on the New York Mercantile Exchange, after trading as high as $30.25.
The EIA reported that crude inventories rose by four million barrels for the week ended 15 January 2015. That was lower than the 4.6 million-barrel climb reported by the American Petroleum Institute on Wednesday, but amarket expected supplies to be up by a smaller 2.9 million barrels. Gasoline supplies climbed by 4.6 million barrels, while distillate stockpiles fell by one million barrels last week.
Also supportive for prices, oil production in the lower 48 states edged lower for the first time in seven weeks.
Treasuries retreated for most of the session as the rally in equities and oil kept buying suppressed. During the afternoon retreat, the benchmark note was able to move off its low, but the 10-yr yield still ended higher by three basis points at 2.01%.
Today's trading session was true to recent form, generating volume of more than 1.1 billion shares at the NYSE floor.
Tomorrow's economic data will include December Existing Home Sales (consensus 5.12 million) and December Leading Indicators (consensus -0.1%) with both set to cross the wires at 10:00 ET.
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