While you were sleeping: Wall Street weakens

Thursday 17th November 2016

Wall Street fell with bank stocks, while some tech shares including Apple continued a rebound from their recent slide, as investors reassessed their post-US election bets.

In 1.27pm trading in New York, the Dow Jones Industrial Average shed 0.5 percent, while, in 1.12pm trading, the Standard & Poor’s 500 Index fell 0.3 percent. The Dow closed at a record high on Monday.

The Nasdaq Composite Index added 0.2 percent.

“As much as we love to believe that all the pro-business things that the new administration and the Republican Congress is going to move forward with, that’s still next year’s business,” Art Hogan, chief market strategist and director of research for Wunderlich Securities in Boston, told Bloomberg. “You have to look at a market that in the short term is getting stretched.”

The Dow moved lower as declines in shares of Goldman Sachs and those of JPMorgan Chase, down 2.3 percent and 2.3 percent respectively, outweighed gains in shares of Apple and those of Visa, up 2.4 percent and 1.7 percent respectively.

"Investors should book gains and wait for more evidence that the structural improvement in macro trends and regulations will materialise,” brokerage Baird said of the post-election rally in bank stocks, according to Reuters.

Bucking the trend, shares of Target rallied, trading 7.2 percent higher as of 1.32pm in New York, after the retailer posted quarterly profit that surpassed expectations and upgraded its full-year forecast.

The latest quarterly earnings "reflect meaningful improvement in our traffic and sales trends and much stronger-than-expected profitability,” Brian Cornell, CEO of Target, said in a statement.

While bets remain firmly in favour of a Federal Reserve interest rate increase in December, a Labour Department report showed wholesale prices in the US were weaker than expected last month.The producer price index was unchanged from September, after a 0.3 percent increase the previous month.

Separately, a Fed report showed factory production rose 0.2 percent in October, following a similar increase in September.

"With the global economic backdrop more stable and growth set to pick up in the United States, we expect to see activity in the manufacturing sector improve a bit in the coming months," Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina, told Reuters.

In Europe, the Stoxx 600 Index ended the day with a 0.2 percent decrease from the previous close. The UK’s FTSE 100 Index fell 0.6 percent, Germany’s DAX Index slid 0.7 percent, while France’s CAC 40 Index dropped 0.8 percent.

OPEC officials are working to nail down details of their plan to limit oil supply and gaps over some sticking points are narrowing, Reuters reported, citing OPEC sources.

Two sources familiar with discussions said efforts were under way to narrow gaps and a final agreement would be reached, according to Reuters.

That optimism was reflected in the market. The total volume of calls giving investors the right purchase West Texas Intermediate crude rose to the equivalent of 303 million barrels on Tuesday, according to preliminary CME Group data compiled by Bloomberg.

“There is definitely somebody that thinks that there is a risk of having higher prices in the first half of 2017,” Olivier Jakob, managing director of Petromatrix GmbH in Zug, Switzerland, told Bloomberg. “It’s saying that somebody in the market is either hedging for potential higher prices in 2017, or somebody is taking a bet that prices will be higher next year.”

BusinessDesk.co.nz

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