MARKET SNAPSHOT: U.S. Stock Gains Limited By Energy Sector

20 Jan 2016 | Author: | No comments yet »

Dow Jones Industrial Average Up Today Despite Oil Prices Hitting 11-Year Low.

U.S. stocks advanced on Monday, stabilizing after their deep selloff last week in the wake of the Federal Reserve’s decision to raise interest rates.

The Dow Jones Industrial Average DJIA, +0.01% gained 49 points or 0.3% to 17,173 while, the Nasdaq Composite COMP, +0.21% climbed 22 points or 0.5%, to 4,945. “Historically, Santa rally starts about now and continues until the first few days of January. We are hoping the selling on Thursday and Friday was an aberration and due to massive options expiration,” said Jeffrey Saut, chief investment strategist at Raymond James. Stocks have seen wider swings in recent weeks around the Fed’s plan to increase rates for the first time in nearly a decade, which was announced last Wednesday.

And with the low volume will come a pickup in volatility, so “Santa maybe just around the corner, but don’t rule out the commodity rout stealing the limelight yet again.” U.S. markets will close early on Christmas Eve and not reopen until Monday, in what will be a full day of trading. Elsewhere, Spain’s IBEX was deep in the red, down 2.5% after the ruling Popular Party failed to win sufficient votes to form a government on its own, a rebuke by voters to unpopular austerity measures.

Fed Focus: On Friday, Richmond Federal Reserve Bank President Jeffrey Lacker predicted that the U.S. central bank will increase interest rates up to four times over the next 12 months. SPAIN ELECTION One market that wasn’t faring well Monday was Spain’s IBEX, which was down 2.8 percent after Sunday’s election saw the far-left Podemos and the business-friendly Ciudadanos parties win a number of seats. The rest of the week will be busy, and Wednesday marks the busiest day for data releases, with durable goods orders, and consumer spending and sentiment all coming out at once. However, some foresee challenges to that prediction, including low oil prices, concerns about economic growth for major trade partners, and a recent downturn in domestic manufacturing.

THE CONTEXT Although Spain’s economy has been growing strongly over the last year, its public finances remain strained amid unemployment levels of around 20 percent. Though Spain did not need a financial bailout like others in the 19-country eurozone, such as Greece and Portugal, the Popular Party government has been pursuing relatively tough budgetary policies and wide-ranging economic reforms. ANALYST’S TAKE “We could now be facing an era of political paralysis and instability in Spain,” said Craig Erlam, a senior market analyst at OANDA.

Stocks to Watch No. 1, ISIS: Drug manufacturer Isis Pharmaceuticals Inc. (Nasdaq: ISIS) announced that it will change its name to “Ionis Pharmaceuticals Inc.” The decision comes as the firm attempts to disassociate its name from the terrorist organization ISIS. Tim Cook told journalist Charlie Rose that the technology company manufactures its products in China because Chinese workers have more skills than American and German workers. In addition, Cook said the company is keeping money abroad because of the antiquated domestic tax code, which was developed – in his terms – for the industrial age, not the digital age.

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