Stock Market News for December 15, 2014 – Zacks Investment …
Benchmarks finished in the red as decline in oil prices dragged down energy shares on Friday, offsetting positive consumer sentiment data. Moreover, dismal economic data from China also dented investor confidence. The S&P 500 and the Dow registered their biggest weekly losses since May 2012 and Sep 2011, respectively.
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The Dow Jones Industrial Average (DJI) declined 1.8% or 315.51 points, to close at 17,280.83. The Standard & Poor 500 (S&P 500) lost 1.6% to close at 2,002.33. The tech-laden Nasdaq Composite Index closed at 4,653.60; decreasing 1.2%. The fear-gauge CBOE Volatility Index (VIX) rose almost 5% to settle at 21.08. A total of about 7.6 billion shares were traded on Friday, higher than month to date average of 6.9 billion. Decliners outpaced advancing stocks on the NYSE. For 78% stocks that declined, 20% advanced.
On Friday, the International Energy Agency (IEA) reduced its guidance for global oil demand in 2015 by 230,000 barrels per day (bpd) to 0.9 million bpd on global growth concerns. According to the IEA, weak global growth has reduced oil demand in major parts of the globe and resulted in a negative impact on oil prices. Moreover, IEA also cut its outlook for demand for oil from the Organization of Petroleum Exporting Countries (OPEC) in 2015 by 300,000 bpd. The IEA report isn’t surprising, as it follows similar readings from other agencies like the U.S. government’s Energy Information Administration, OPEC and others.
This negative report pressurized oil prices further on Friday. Prices of WTI crude oil and Brent crude oil declined 3.7% and 3% to $57.81 per barrel and $61.85 per barrel, respectively. The drop in oil prices pushed energy shares into negative territory. The Energy Select Sector SPDR (XLE) declined 1.9% on Friday. Key energy stocks including Schlumberger Limited (SLB – Analyst Report), Exxon Mobil Corporation (XOM – Analyst Report), Chevron Corporation (CVX – Analyst Report) and Baker Hughes Incorporated (BHI – Analyst Report) declined 3.6%, 2.9%, 2.4% and 1.4%, respectively.
Decline in oil prices also had a negative impact on the Producer Price Index (PPI). The U.S. Department of Labor reported on Friday that PPI declined 0.2% in November, wider than the consensus estimate of 0.1% decline. The core PPI remained flat in November, compared to the consensus estimate of 0.1% gain.
Additionally, China released disappointing factory output data on Friday, signaling sluggish growth in the second largest economy of the world. The Chinese government reported that industrial production grew at a pace of 7.2%, preceded by 7.7% rise and 8% growth in October and November respectively. Economic growth had touched a five-year low of 7.3% in the previous quarter. Additionally, the country’s imports also witnessed contraction in November.
China’s dismal industrial production data also raised concerns about global growth which dragged down the Materials Select Sector SPDR ETF (XLB) as the sector is closely related to global growth. The sector lost 2.8% and was the biggest loser among the S&P 500 sectors. Key materials stocks including The Dow Chemical Company (DOW – Analyst Report), International Paper Company (IP – Analyst Report), Nucor Corporation (NUE – Analyst Report) and PPG Industries Inc. (PPG – Analyst Report) declined 5.8%, 2.3%, 2.1% and 1.3%, respectively. All of the S&P 500 sectors registered losses on Friday.
However, the preliminary reading of the University of Michigan and Thomson Reuters consumer sentiment index for December came in better-than-expected. The reading increased to 93.8 in December from November’s final reading of 88.8, beating the consensus estimate of 89.7. This is the highest reading for the index since Jan 2007.
Separately, shares of Adobe Systems Inc. (ADBE – Analyst Report) jumped 9% after reporting fourth quarter earnings per share of 22 cents, beating the Zacks Consensus Estimate of 17 cents. Adobe also reported quarterly revenues of $1.073 billion, also higher than the Zacks Consensus Estimate of $1.062 billion. The company also announced it was buying privately held stock photography company Fotolia for about $800 million.
Over the week, the Dow, S&P 500 and Nasdaq declined 3.8%, 3.5% and 2.7%, respectively.
Benchmarks ended in negative territory in the previous week as drop in oil prices had a negative impact on energy shares. Moreover, dismal economic reports from overseas and some disappointing domestic economic data also dented investor sentiment.
Oil prices continued to decline throughout the week on decreasing global demand. Moreover, the OPEC slashed its demand for oil estimates in the next year due to abundant North American output and rise in other producers. Additionally, discouraging overseas data including China’s trade numbers, contraction of Japan’s economy and Germany’s dismal industrial output dragged down markets.
However, better-than-expected retail sales data and an impressive initial claims report limited some of the week’s losses.
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Stock Market News for December 15, 2014 – Zacks Investment …
