Benchmarks ended on a mixed note yesterday after clinching new records over the past two trading days. Dismal housing sales data arrested whatever buoyancy was achieved from the Iran nuclear deal. At one point during the trading day, the Nasdaq had moved beyond 4K for the first time since 2000, but finally lost out on much of the day’s gains. While the S&P 500 was the lone index to end in the red, the meager gains in the blue-chip index was enough to extend its all-time record run. The healthcare sector was the biggest gainer among the S&P 500 industry groups while energy sector lost the most.
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The Dow Jones Industrial Average (DJI) increased 0.1% to close the day at 16,072.54. The S&P 500 dropped 0.1% to finish yesterday’s trading session at 1,802.48. The tech-laden Nasdaq Composite Index climbed 0.1% to end at 3,994.57. The fear-gauge CBOE Volatility Index (VIX) edged up 4.32% to settle at 12.79. Consolidated volume on the New York Stock Exchange was roughly 3.0 billion shares. Declining stocks outnumbered the advancers. For 54% shares that declined, 43% advanced.
A holiday-shortened week is most likely to witness lower volumes and this is exactly what happened yesterday. Also, the day was short of domestic action apart from the pending home sales report. However, major news came in over the weekend, namely the landmark Iran nuclear agreement. The U.S. and other important global powers, such as Russia, China, France, the UK and Germany signed an agreement with Iran as per which the country will curtail some of its nuclear activities. In exchange, Iran will gain $7 billion over a period of six months due to the withdrawal of sanctions. The deal promises to reduce conflict risks and boost trade in the short term. It will also make it easier for Iran to export crude oil. As a result, oil prices moved south.
Consequently, the agreement signed at Geneva had its effect on the energy sector. Oil prices dropped about 0.8%, to settle at $94.09 per barrel following these developments, affecting the energy sector. Energy stocks were the biggest losers on the S&P 500 and the Energy SPDR (XLE) lost 0.9%. Stocks such as Chevron Corporation (NYSE:CVX), Schlumberger Limited. (NYSE:SLB), Occidental Petroleum Corporation (NYSE:OXY), ConocoPhillips (NYSE:COP), and Pioneer Natural Resources (NYSE:PXD) lost 0.2%, 3.2%, 1.9%, 1.6%, and 3.0%, respectively.
The US President Barack Obama called the agreement “an important first step toward a comprehensive solution”. On the other hand, White House spokesman Josh Earnest said: “The president underscored that the United States will remain firm in our commitment to Israel, which has good reason to be skeptical about Iran’s intentions”.
Coming to housing data, the National Association of Realtors reported that the pending home sales index dropped 0.6% to 102.1 in October, below the consensus estimate of 2%. The index is at its lowest level since December 2012. It was a decline in contracts for the fifth month in a row.
Consequently, the SPDR S&P Homebuilders ETF (XHB) dropped 0.03%. Stocks such as PulteGroup, Inc. (NYSE:PHM), KB Home (NYSE:KBH), Lennar Corporation (NYSE:LEN), M.D.C. Holdings, Inc. (NYSE:MDC), and The Ryland Group, Inc. (NYSE:RYL) lost 0.4%, 2.0%, 0.7%, 1.5%, and 1.4%, respectively.
Separately, shares of Wal-Mart Stores, Inc. (NYSE:WMT) climbed 0.8% to $80.43 after the world’s largest retailer said it has chosen the new CEO. Company veteran Doug McMillon will succeed Mike Duke as president and CEO, effective from February next year.
The healthcare sector was the biggest gainer among the S&P 500 industry groups. The Health Care SPDR (XLV) gained 0.4%. Stocks such as Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Merck & Co., Inc. (NYSE:MRK), Gilead Sciences, Inc. (NASDAQ:GILD), and Amgen, Inc. (NASDAQ:AMGN) added 0.4%, 0.1%, 1.5%, 0.4%, and 0.8%, respectively.