This week, markets will focus on the Federal Open Market Committee meeting
The U.S. stock market bounced between gains and losses on Monday, 27 October 2014 before wrapping up Monday's relatively benign trading session mostly unchanged. The Dow Jones Industrial Average and The Nasdaq Composite eked out marginal gains, finishing up less than a percentage point. Investors flocked to stocks of large, dividend-paying companies over shares of those businesses tethered to the strength of the overall economy.
Dow industrials finished at 16,817.94 and the Nasdaq ended the day at 4,485.93. The S&P 500 closed 3 points, or 0.2%, lower at 1,961.63, with energy and materials dragging down the benchmark index.
Equity indices faced selling pressure at the start, but the source of the early weakness was isolated to the two commodity-linked sectors that spent the entire session at the bottom of the leaderboard. But gains in shares of so-called defensive companies, like telecoms and consumer-staples stocks, which tend to pay dividends, were offset by sharp losses in so-called cyclical shares.
Across the Atlantic, relatively sanguine results of a series of tests of the health of the European banking system were overshadowed by worry over weak German data, sending European stock markets lower.
The much-anticipated stress test results on European Union financial institutions were released over the weekend. While there were some EU banks that failed the tests, overall the results were not deemed threatening to the EU financial system.
There was another downbeat economic report coming out of the EU on Monday, as Germany's Ifo business confidence index came in at 103.2 in October, versus 104.7 in September. The Ifo reading this month was at a two-year low.
This week, markets will focus on the Federal Open Market Committee meeting, where the central bank is expected to announce the end of quantitative easing. How QE worked in the U.S. and could work in Europe.
Bullion prices dipped on Monday, 27 October 2014 at Comex failing to maintain the prior session's momentum in a busy week of corporate earnings and economic data. LAst week, on Friday, gold put an end to a two-day losing streak after increased Ebola concerns sent investors to seek the perceived safety of the precious metal. A key meeting of the Federal Reserve, as it is set to announce the end of its 2008-era bond-buying stimulus program this week, also could influence prices of the yellow metal.
Crude oil futures fell sharply on Monday, 27 October 2014 at Nymex after Goldman Sachs slashed its forecast for prices, predicting West Texas Intermediate crude oil prices will spend the better part of 2015 at $75 a barrel. A key meeting of the Federal Reserve, as it is set to announce the end of its 2008-era bond-buying stimulus program this week
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December slid 35 cents, or 0.4%, to $80.66 a barrel after briefly dipping below $80.
Goldman analysts brought forward their medium-term bearish oil outlook, as they predicted WTI crude will average $75 a barrel for the first quarter of 2015 and the second half of 2015. That's down nearly 17% from $90 a barrel, previously. They cut their Brent forecast by 15%, to $85 a barrel, from $100 a barrel, previously. The 2016 and long-term forecasts for those oil prices are $80 a barrel WTI and $90 a barrel for Brent.
Gold for December delivery lost 2.50 cents to settle at $1,229.30 an ounce. December silver gave up 2 cents to $17.16 an ounce.
Treasuries climbed to highs shortly after the start of the session and spent the day near their best levels of the session. The 10-yr yield ticked down two basis points to 2.26%.
Participation was a bit below recent averages with 741 million shares changing hands at the NYSE floor.
Tomorrow, the Durable Orders report for September (consensus 0.6%) will be released at 8:30 ET while the Case-Shiller 20-city Index for August (consensus 5.5%) will cross the wires at 9:00 ET. The day's data will be topped off with the 10:00 ET release of the October Consumer Confidence report (expected 87.2).
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