While you were sleeping: Wall Street pares gains

Wednesday 13th January 2016

Wall Street pared earlier gains as oil plumbed fresh lows, while other commodities also fell, as investors tried to gauge China’s efforts to stabilise its stock market and currency.

In 12.54pm trading in New York, the Dow Jones Industrial Average fell 0.1 percent. The Nasdaq Composite Index, however, rose 0.2 percent. In 12.39pm trading, the Standard & Poor’s 500 Index slid 0.2 percent, after earlier rising as much as 1.2 percent.

“This is a market that’s been selling off very hard and is probably short-term oversold,” Alan Gayle, senior strategist for Atlanta-based Ridgeworth Investments, told Bloomberg. “Trying to read the day-to-day implications from Chinese policy moves is exceptionally challenging.”

Oil weakened. Benchmark Brent crude touched US$30.43 per barrel, the lowest since April 2004, while US West Texas Intermediate crude slid as low as US$30.10, the lowest since December 2003.

“The momentum is too strong to the bearish side, even if fundamentally nothing has changed,” Dominick Chirichella, a senior partner at Energy Management Institute, told Reuters.

The Dow moved lower as declines in shares of DuPont and those of Caterpillar, last trading 1.8 percent and 1.2 percent weaker respectively, outweighed gains in shares of UnitedHealth Group and those of Coca-Cola, last up 1.7 percent and 1 percent respectively.

Shares of Alcoa dropped, last trading 9.3 percent weaker, after the aluminium company preparing to split in two posted quarterly earnings that topped expectations though revenue fell short of estimates. Mostly though, the stock was hit by concern about the ongoing slide in commodity prices.

Overall, US earnings are expected to show a drop of 4.7 percent in the fourth quarter, according to Thomson Reuters data.

“Expectations for earnings and revenue growth are pretty low right now, so the opportunity to beat expectations is as easy as jumping over a limbo stick,” Jack Ablin, chief investment officer at BMO Private Bank in Chicago, told Reuters.

Still, the US jobs market keeps showing signs of strength. Job openings increased in November, rising 82,000 to a seasonally adjusted 5.43 million, according to the Labor Department. Hiring increased to 5.20 million in November, up from 5.17 million in October.

“Labour market fluidity is increasing,” Thomas Costerg, a senior US economist at Standard Chartered Bank in New York, told Bloomberg. “More people are taking risks. People are happy to put their necks out to look around and get a new job. There’s less slack to work through.”

In Europe, the Stoxx 600 Index ended the day with a 1.9 percent increase from the previous close. The UK’s FTSE 100 Index advanced 1 percent, France’s CAC 40 Index gained 1.5 percent, while Germany’s DAX Index climbed 1.6 percent.

Shares of car makers received a boost from a Chinese government report predicting the country’s vehicle sales are set to rise this year, thanks to a tax cut on purchases of small passenger cars.

Total deliveries may rise about 6 percent to top 26 million vehicles, according to Bloomberg, citing the state-backed China Association of Automobile Manufacturers.

BusinessDesk.co.nz

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