US stocks moderately higher in light trading

20 Jan 2016 | Author: | No comments yet »

U.S. stocks stage rally to end higher.

The main indexes gave up early gains after a harsh selloff in European markets and continued weakness in energy shares that were hit by falling oil futures. Stocks have seen volatile moves in recent weeks as investors braced for the Fed’s plan to increase interest rates for the first time in nearly a decade, announced last Wednesday. The Dow Jones Industrial Average DJIA, +0.72% rose 122.87 points, or 0.7%, to 17,251.42, while the Nasdaq Composite COMP, +0.93% climbed 45.84 points, or 0.9%, to 4,968.92. “It is difficult to have meaningful rallies when there is so much volatility,” said Colin Cieszynski, chief market strategist at CMC Markets. Keeping a lid on stocks’ gains Monday was renewed selling in oil and junk bonds, two corners of the market that have been a source of pressure on stocks recently. “I would expect that uncertainty around the Fed’s pace [of rate increases] to continue through 2016,” said Jim McDonald, chief investment strategist at Northern Trust, which has $887 billion in assets under management. “We expect volatility to remain very high.” Brent crude-oil prices fell Monday to their lowest level since 2004, falling 1.4 per cent to $36.35 a barrel.

He warned of more choppiness over the next few weeks and cast doubt on whether there will be a Santa rally. “Historically, a Santa rally starts about now and continues until the first few days of January. Energy shares in the S&P 500 rose less than 0.1 per cent. “It feels like [investors] are kind of risk-averse,” said Justin Wiggs, equity trader at Stifel Nicolaus. “As long as we’re in de-risking mode, everything is going to suffer.” Mr. McDonald said he is expecting a recovery in the junk-bond market, but he is advising investors to stay away from beleaguered issuers in the energy sector. “We think there has been some value created” in the sell-off. Shares of Sequential Brands Group Inc. gained 4.4 per cent after the company raised its revenue forecast for this year and said its acquisition of Martha Stewart Living Omnimedia Inc. would help boost revenue sharply next year. And with the low volume will come a pickup in volatility, so “Santa may be just around the corner, but don’t rule out the commodity rout stealing the limelight yet again.” In other economic news, the Chicago Fed national activity index for November fell to negative 0.3 from 0.17.

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. CMG, -3.52% fell 3.5% after the Centers for Disease Control and Prevention said it is investigating another, more recent outbreak of E. coli last month. In Asia, Japan’s Nikkei Stock Average fell 0.4 per cent, continuing a slide as investors worried the Bank of Japan might be reluctant to expand its easing program. Other markets: Markets in Europe SXXP, -1.13% closed lower, led by big losses in Spain’s stock market, where the ruling Popular Party lost its parliamentary majority in a historic weekend election.

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