Utilities and materials sectors lead the decline
U.S. stocks lost steam in the final hour of trading on Thursday, 10 December 2015 but still finished with modest gains, snapping a three-day slump that has been powered by plunging oil prices.
The Dow Jones Industrial Average gained 82.45 points, or 0.5%, to 17,574.75. The Nasdaq Composite advanced 22.31 points, or 0.4%, to 5,045.17. The S&P 500 index closed 4.61 points, or 0.2%, higher at 2,045.23. Eight of its 10 main sectors finished with gains, led by a rise in health-care and climb in energy stocks.
The Thursday advance did not occur without some theatrics as the S&P 500 marked a morning high during the first 90 minutes of the day and followed that with a return to its flat line. The benchmark index charged to a fresh high in the early afternoon, but backtracked from that level to end in the lower third of today's range.
Equity indices spent the first hour of action near their flat lines, but the energy sector displayed relative strength from the start, which underpinned today's advance. The utilities sector posted a decline of 1.7% and materials finished with a 0.8% fall, making them the worst performers among the S&P 500's sectors.
Oil prices fell Thursday, for a fifth day in a row, after the Organization of the Petroleum Exporting Countries' monthly report showed that the cartel's oil output was at its highest level since 2012, a sign that the global supply glut will continue.
On the downside, materials and utilities spent the day in negative territory with the materials space pulling back after yesterday's surge.
Expectations that the Fed will decide to hike interest rates at the conclusion of its meeting this coming Wednesday has been growing. Higher interest rates increase the cost of storing commodities, and make them less attractive for investors seeking better returns across assets. Higher rates can also boost the dollar, which would make dollar-denominated gold even less attractive. The Federal Reserve is widely expected to raise interest rates for the first time in almost a decade next week at its two-day policy meeting starting 15 December 2015.
On the data front, new applications for U.S. unemployment benefits jumped by 13,000 to 282,000 in the seven days ended Dec. 5, the highest level in five months. The increase was more than expected, but investors showed little reaction. Also, the prices Americans paid for imported goods declined 0.4% in November, driven by a 2.5% plunge in energy prices. Import prices have fallen every month in 2015 except May and June.
Treasuries spent the day inside narrow ranges, slipping to lows just ahead of the close. The 10-yr note settled on its low with the benchmark yield rising two basis points to 2.23%.
Crude oil prices settled under $37 a barrel on Thursday, 10 december 2015 for the first time since 2009, after data from the Organization of the Petroleum Countries' report showed that the group increased its crude production in November to its highest monthly level in three years. Natural-gas futures, meanwhile, ended with a loss after a U.S. government report showed that supplies fell more than expected last week, but total stocks remained well above the year-ago level.
On the New York Mercantile Exchange, January West Texas Intermediate crude shed 40 cents, or 1.1%, to settle at $36.76 a barrel. That was the lowest settlement for a most-active contract since February 2009 and prices have now extended their losing streak to a fifth straight session.
OPEC's monthly report revealed total production rose in November by 230,100 barrels a day from October, to 31.695 million barrels a day, largely due to higher output from Iraq. But the cartel cut its 2016 estimates for non-OPEC output by 250,000 barrels a day to average 57.14 million barrels a day, noting that U.S. shale-oil production has been falling since April. OPEC said that process should speed up, notably due to the sharp fall in oil prices.
The OPEC report was the first since the cartel last week decided to essentially raise its production ceiling to 31.5 million barrels of oil a day, to reflect the current actual production, a move that sent oil prices tumbling.
Bullion prices ended lower on Thursday, 10 December 2015 bucking a trend that has seen the precious metal record modest back-to-back gains, as investors grew more wary ahead of the U.S. Federal Reserve's meeting next week.
February gold shed $4.50, or 0.4%, to settle at $1,072 an ounce. Prices edged higher over the past two trading sessions. So far this month, the metal has now seen an equal number of up days as down days. Meanwhile, March silver lost 7.9 cents, or 0.6%, to finish at $14.11 an ounce.
Today's participation was relatively light with fewer than 850 million shares changing hands at the NYSE floor.
Tomorrow, November CPI (consensus +0.1%) and November Retail Sales (consensus +0.3%) will be reported at 8:30 ET while October Business Inventories (expected +0.1%) and the preliminary reading of the Michigan Sentiment Index for December (consensus 91.6) will both be released at 10:00 ET.
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