Stock Market News for December 01, 2014
Markets ended Friday’s holiday-shortened session on a mixed note following decline in oil prices that dragged down energy shares. However, slide in oil prices boosted airlines and retail shares on Black Friday. Moreover, major benchmarks registered weekly gains for the sixth consecutive week and also managed to finish in positive territory in November.
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The Dow Jones Industrial Average (DJI.V) rose only 0.49 point to close at 17,828.24. However, the Standard & Poor 500 (S&P 500) declined 0.3% to close at 2,067.56. The tech-laden Nasdaq Composite Index closed at 4,791.63; increasing 0.1%. The fear-gauge CBOE Volatility Index (:VIX) increased almost 10.4% to settle at 13.33. A total of about 4.2 billion shares were traded on Friday. Decliners outpaced advancing stocks on the NYSE. For 59% stocks that declined, 37% advanced. Markets were closed on Thursday due to Thanksgiving Day and stocks were traded till 1 PM EST on Black Friday.
On Friday, oil prices declined to a multi-year low level after Organization of Petroleum Exporting Countries’ (:OPEC) decision to continue with the present volume of oil production. In a meeting at the Austrian capital of Vienna on Thanksgiving Day, OPEC members concluded that they will keep their output level at 30 million barrels per day as decided on Dec 2011. However, given the weak oil pricing scenario, most investors were expecting output cut from OPEC as the move could have arrested declining crude prices.
This decision had a negative impact on oil prices on Friday. The price of WTI crude oil plummeted 11.4% to $66.15 per barrel, its lowest level since Sep 25, 2009. Moreover, price of Brent crude oil plunged 10.8% to $70.15 per barrel, reaching its lowest level since May 25, 2010.
Energy shares were severely affected by the decline in oil prices on Friday. The Energy Select Sector SPDR (XLE) lost 6.4% and was the biggest loser among the S&P 500 sectors. Key energy stocks including Halliburton Company (HAL), Baker Hughes Incorporated (BHI), Chesapeake Energy Corporation (CHK) and Schlumberger Limited (SLB) declined 10.9%, 8.9%, 12.1% and 7.4%, respectively.
However, airline shares posted solid gains on Friday due to slide in oil prices. Key airline stocks including Southwest Airlines Co. (LUV), Delta Air Lines, Inc. (DAL), United Continental Holdings, Inc. (UAL) and American Airlines Group Inc. (AAL) gained 6.5%, 5.5%, 8.2% and 7.9%, respectively.
Additionally, retail stocks also registered gains on Friday as markets speculated Black Friday sales would increase due to a fall in oil prices. Key retail stocks including Macy's, Inc. (M), Best Buy Co., Inc. (BBY), Target Corp. (TGT) and The Home Depot, Inc. (HD) rose 2.2%, 1.7%, 2.6% and 1.7%, respectively.
Also, shares of Wal-Mart Stores Inc. (WMT) gained 3% after announcing that the retailer witnessed its second best one-day online sales on Thanksgiving Day, only behind the record sales on last year’s Cyber Monday.
Over the week, the Dow, S&P 500 and Nasdaq gained 0.1%, 0.2% and 1.7%, respectively.
Markets ended in the green last week as upbeat earnings results and some positive economic data offset the slide in oil prices over the week. Moreover, encouraging efforts by China and Europe to improve their economic health also boosted investor confidence.
Upbeat earnings results last week include the likes of Hewlett-Packard Company’s (HPQ) and Analog Devices, Inc. (ADI). However, earnings reports from Hormel Foods Corporation (HRL) and Tiffany & Co. (TIF) came out weaker-than-expected.
Moreover, People’s Bank of China’s decision to lower its key interest rates and European Central Bank’s (:ECB) declaration that it had started purchasing asset-backed securities positively impacted markets. Also, encouraging economic data including second estimate of third quarter GDP, durable orders and new home sales number boosted benchmarks.
However, certain dismal economic reports such as consumer confidence, pending home sales index and initial claims dented investor sentiment.
In November, the Dow and S&P 500 both rose 2.5% and the Nasdaq gained 3.5%.
Benchmarks finished in positive territory in November as upbeat earnings results from retailers and US midterm election results improved investor confidence. Moreover, encouraging deal news and easing global growth worries also boosted benchmarks. However, decline in oil prices throughout the month affected energy shares. Saudi Arabia’s decision to reduce export prices of crude for the US market while hiking them for Asia was one of the major reasons for the decline in oil prices.
Encouraging earnings results include Wal-Mart Stores Inc., Cisco Systems, Inc. (CSCO), Macy's, Best Buy, Dollar Tree, Inc. (DLTR) and Target. Moreover, merger and acquisition news between Hasbro Inc. (HAS) and DreamWorks Animation SKG Inc. (DWA), Actavis (ACT) and Allergan Inc. (AGN), and Berkshire Hathaway Inc. (BRK.A) and The Procter & Gamble Company (PG) also boosted markets.
The Republicans notched a strong win in the midterm elections over the Democrats, securing a majority in both chambers of Congress for the first time since 2006. Investors cheered the results as they expect that Republicans winning both chambers should help clear many bills.
Moreover, encouraging confidence data from Germany and positive news from Japan reduced worries about global growth to some extent. However, reignited tensions in Ukraine, soft data from Europe and China offset some of the gains.
Read the analyst report on HAL
Read the analyst report on BHI
Read the analyst report on LUV
Read the analyst report on DAL
Read the analyst report on BBY
Read the analyst report on TGT
Read the analyst report on WMT
Read the analyst report on HPQ
Read the analyst report on ADI
Read the analyst report on HRL
Read the analyst report on AGN
Read the analyst report on PG
Read the analyst report on DWA
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