Stock Market News for December 22, 2014 – Zacks Investment …

Stock Market News for December 22, 2014 – Zacks Investment …

Benchmarks ended a turbulent week on a positive note as investors continued to welcome Fed’s decision to remain ‘patient’ before raising the interest rate from near zero level. Moreover, rebound in oil prices helped energy shares post solid gains. The Dow and the S&P 500 posted their biggest three-day gain on Friday. The indexes also registered their biggest weekly advance since October. On Friday, volume was also higher than usual on a “quadruple witching” day.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) gained almost 0.2%, to close at 17,804.80. The Standard & Poor 500 (S&P 500) rose 0.5% to close at 2,070.65. The tech-laden Nasdaq Composite Index closed at 4,765.38; gaining 0.4%. The fear-gauge CBOE Volatility Index (VIX) declined 1.9% to settle at 16.49. A total of about 2.1 billion shares were traded in NYSE on Friday. Advancers outpaced declining stocks on the NYSE. For 63% stocks that advanced, 35% declined.

Benchmarks gained for the third straight session as investors continued to cheer Federal Reserve’s decision to remain “patient” before raising key interest rates. On Wednesday, Fed stated: “Based on its current assessment, the committee judges that it can be patient in beginning to normalize the stance of monetary policy”. Fed had rephrased the term ‘considerable time’ to ‘patience’. Fed also assured that rate hikes will be methodical and believes that increase in interest rates may happen sometime in 2015.

Fed’s policy statement helped the Dow and the S&P 500 register their biggest three-day gain on Friday since late 2011. The Dow and the S&P 500 extended their last three trading session gains by 4.3% and 4.9%, respectively.

Separately, a rally in oil prices helped energy shares post solid gains on Friday. The West Texas Intermediate (WTI) crude oil price increased 4.3% to $56.52 per barrel after closing at its lowest level since May 2009 on Thursday. Additionally, price of Brent crude oil bounced back from a five and a half year low, gaining 3.4% to settle at $61.38 per barrel.

The Energy Select Sector SPDR (XLE) advanced 2.6%. The sector was the biggest gainer among the S&P 500 sectors. For the week, the sector gained 9.7%. Shares of key energy stocks including Chevron Corporation (CVXAnalyst Report), Schlumberger Limited (SLBAnalyst Report), EOG Resources, Inc. (EOGAnalyst Report), Kinder Morgan, Inc. (KMIAnalyst Report) and Occidental Petroleum Corporation (OXYAnalyst Report) increased 3.6%, 3.9%, 2.8%, 2.6% and 2.9%, respectively.

The materials sector also ended in positive territory. The Materials Select Sector SPDR (XLB) gained 1.2%. Steelmakers contributed to gains with the Market Vectors Steel ETF going up 3%. Other key material shares such as E. I. du Pont de Nemours and Company (DDAnalyst Report), Monsanto Company (MONAnalyst Report), The Dow Chemical Company (DOWAnalyst Report) and LyondellBasell Industries N.V. (LYBAnalyst Report) increased 1.5%, 1.3%, 0.8% and 3.5%, respectively. Overall, 7 out of 10 sectors of the S&P 500 ended in the red.

Meanwhile, a drop in share price of Nike, Inc. (NKEAnalyst Report) restricted the Dow and the S&P 500’s advance. Shares of Nike went down by 2.3% as analysts blamed soft future orders for the fall in share price. The company’s global future orders, slated for delivery from Dec 2014 through Apr 2015, grew 7% year over year, at the quarter-end, owing to weak global currencies. However, the company posted encouraging second-quarter fiscal 2015 results. The company’s second-quarter fiscal 2015 earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 70 cents.

For the week, the Dow and the S&P 500 gained 3.1% and 3.4%, respectively, posting their biggest weekly gains since October. The Nasdaq too increased 2.4% over the week.

Benchmarks ended in the green for the week as the Fed issued encouraging statements regarding economic growth in the U.S. and a rate hike. The Fed mentioned it will wait for further improvement in the labor market and inflation rate before lifting the rate from a record low. The Fed forecasted that the unemployment rate will reach 5.2% to 5.3% by the end of 2015. Fed Chairwoman Janet Yellen also added that Fed officials firmly believe that the inflation rate will achieve the Fed’s target rate of 2%. Moreover, rebound in oil prices, encouraging jobless claims data and positive earnings reports helped benchmarks post solid gains.

Benchmarks experienced record gains in the last three trading sessions after a nosedive in Russian ruble raised worries about the global economy on Tuesday. Ruble slumped despite Russian central bank hiking interest rates to 17%. Decline in technology and consumer discretionary shares also resulted in some losses.

Originally posted here: 

Stock Market News for December 22, 2014 – Zacks Investment …

Share this post