Investors cheered mostly positive earnings from financial institutions
U.S. stocks rose for a second straight session on Wednesday, 16 January 2019 as investors cheered mostly positive earnings from financial institutions such as Goldman Sachs Group and Bank of America even as Wall Street continued to deal with uncertainty from a partial government shutdown.
The Dow Jones Industrial Average rose 141.57 points, or 0.6%, to 24,207.16, while the S&P 500 index climbed 5.80 points, or 0.2%, to 2,616.10. The Nasdaq Composite Index advanced 10.86 points, 0.2%, to 7,034.69.
Investors were cheered by quarterly results from Goldman Sachs Group hich produced earnings and profits that topped expectations on the back of healthy mergers and acquisitions. Bank of America shares gained 7.2% after the bank reported revenue and profit above estimates. Shares of Goldman Sachs also climbed 9.5% following strong earnings.
Reviewing this Wednesday's economic data, which included the NAHB Housing Market Index, Import and Export Prices for December, the Fed's Beige Book for January, and the weekly MBA Mortgage Applications Index, the NAHB Housing Market Index for January came in at 58 (consensus 56), up from 56 in December. Import prices declined 1.0% month-over-month and were down 0.6% year-over-year. Excluding fuel, they were unchanged in December and up just 0.5% year-over-year. Export prices declined 0.6% and were up 1.1% year-over-year. Excluding agricultural products, they were down 1.1% in December and up 1.0% year-over-year. The key takeaway from the report is that it didn't ring any inflation alarm bells that would compel the Fed to be less patient with its monetary policy approach.
The Federal Reserve's January Beige Book noted that eight out of twelve districts reported modest to moderate growth, but contacts had become less optimistic about their expectations due to increased volatility in financial markets, rising short-term rates, falling energy prices, and trade/political uncertainty.
The weekly MBA Mortgage Applications Index rose 13.5% versus last week's increase of 23.5%.
Meanwhile, the U.S. dollar was little changed versus major rivals, with the ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, nearly flat at 96.01. Gold and other commodities exhibit varying degrees of an inverse relationship with the dollar. A stronger dollar can weigh on demand by making commodities priced in the currencies more expensive to users of other currencies; a weaker dollar can have the opposite effect.
U.K. Prime Minister Theresa May's government suffered a historic defeat in a parliamentary vote Tuesday on her proposal for the terms of the country's departure from the European Union, which is scheduled for March 29. The plan was defeated overwhelmingly by a margin of 432-202 in the House of Commons. May's government faced a vote of no confidence late Wednesday. May was expected to survive the no-confidence challenge, but the path ahead in the Brexit process remains unclear.
Following gold's settlement on Wednesday, the U.S. Federal Reserve's Beige Book, a snapshot of domestic economic activity, revealed that contacts in many districts have become less optimistic in light of market volatility and political uncertainty. Shortly after the release, gold futures showed little reaction, with prices trading at $1,293.60.
Meanwhile, the U.S. dollar was little changed versus major rivals, with the ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, nearly flat at 96.01. Gold and other commodities exhibit varying degrees of an inverse relationship with the dollar. A stronger dollar can weigh on demand by making commodities priced in the currencies more expensive to users of other currencies; a weaker dollar can have the opposite effect.
Bullion prices ended higher at Comex on Wednesday, 16 Januray 2019. Gold futures on Wednesday resumed their climb toward the psychologically important price of $1,300 an ounce, settling at their highest in nearly two weeks on the back of political turmoil in the U.K. and U.S.
Gold for February delivery climbed by $5.40, or 0.4%, to settle at $1,293.80 an ounce, while March silver rose 1.8 cents, or 0.1%, to $15.638 an ounce.
Crude oil futures ended higher on Wednesday, 16 January 2019 with U.S. prices staging a last minute, modest turnaround as a U.S. government report revealed a second straight weekly decline in U.S. crude supplies. An increase in domestic crude output and a hefty weekly rise for gasoline stockpiles had pushed prices lower for much of the trading session.
West Texas Intermediate crude for February delivery rose 20 cents, or 0.4%, to settle at $52.31 a barrel on the New York Mercantile Exchange. That was a modest extension of the more than 3% rise from a day earlier that was fueled by China's move to stimulate its economy. March Brent crude added 68 cents, or 1.1%, to $61.32 a barrel on ICE Futures Europe.
The EIA said domestic crude supplies declined by 2.7 million barrels for the week ended Jan. 11. Market had expected the EIA to report a smaller fall of 250,000 barrels in crude supplies. Gasoline stockpiles climbed by 7.5 million barrels last week, while distillate stockpiles rose by 3 million barrels. Market had expectations for supply increases of 2.6 million barrels for gasoline and 900,000 barrels in distillates.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the Philadelphia Fed Index for January on Thursday.
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