Tag Archives: Economy

Wall Street cuts losses to close flat

(Reuters) – Strong gains in Facebook and Alphabet helped Wall Street cut losses and stage a late-day rally, with major indexes closing near the unchanged mark.

Alphabet rose up 1.2 percent at $770.77 ahead of its results. After the bell, the Internet giant’s stock jumped 9 percent and the company became the most valuable in the United States, surpassing the market cap of Apple.

Twitter jumped 6.6 percent at $17.91 after talk of a private equity deal.

Stocks had been lower earlier in the day as weak Chinese economic data added to concerns about a global slowdown and oil prices resumed their slide. The manufacturing sector in the world’s second-largest economy contracted in January at the fastest pace since 2012.

“Maybe people were relieved that there wasn’t a selloff and that kind of brought some buyers into the market,” said Eric Kuby, chief investment officer, North Star Investment Management Corp in Chicago.

“I think people are starting to focus on upcoming earnings rather than lower oil and China news.”

The Dow Jones industrial average was down 17.12 points, or 0.1 percent, to 16,449.18, the S&P 500 had lost 0.86 points, or 0.04 percent, to 1,939.38 and the Nasdaq Composite had added 6.41 points, or 0.14 percent, to 4,620.37.

Slammed by collapsing oil prices, stocks have been volatile since the start of the year. Coming off the worst January since 2009, the S&P 500 is down 5.1 percent for the year.

Traders now expect the Fed to scale back the number of rate hikes this year. They are pricing in only a 17-percent chance that the Fed will raise rates in March, according to CME Group’s FedWatch.

Fourth-quarter S&P 500 earnings are expected to have fallen 4.1 percent from a year ago, though that percentage has improved since last week, according to Thomson Reuters data.

Chipotle Mexican Grill was up 4.3 percent at $472.64. The U.S. Centers for Disease Control and Prevention (CDC) said E.coli outbreaks that affected the burrito chain’s customers last year appeared to be over.

Declining issues outnumbered advancing ones on the NYSE by 1,556 to 1,503, for a 1.04-to-1 ratio on the downside; on the Nasdaq, 1,418 issues fell and 1,410 advanced.

The S&P 500 posted 29 new 52-week highs and 5 new lows; the Nasdaq recorded 26 new highs and 97 new lows.

About 8.0 billion shares changed hands on U.S. exchanges, compared with the 9.1 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(additional reporting by Tanya Agrawal; Editing by Don Sebastian and Nick Zieminski)

Cheap oil won’t juice the U.S. economy this time: Reuters poll

WASHINGTON (Reuters) – U.S. consumers are cautious about spending their windfall from cheap gasoline and are saving more, according to a Reuters/Ipsos poll and official data, suggesting low oil prices are less of a boon for the U.S. economy than in the past.

Commerce Department data shows that the crude’s 70 percent drop since mid-2014 cut households’ annual spending on gasoline and other energy products by $115 billion, equivalent to roughly 0.5 percent of gross domestic product.

At the same time, however, savings increased by $121 billion and while the data gives no indication where the money has come from, the survey suggests the windfall accounted for a significant part of the sum.

The Reuters/Ipsos poll shows 75 percent of 3,068 Americans who answered questions on gasoline savings said the extra money helped them cover basic needs and the majority have not used their windfall to buy big ticket items. Over 40 percent of respondents said the savings had helped them pay down debts, according to the Jan. 15-27 online poll, which had a credibility interval of plus or minus 1.8 percentage points.

“It obviously hurts less when I go to the grocery store,” said Karen Joines, a recruiting firm product manager from Peachtree City, Georgia. Joines, who participated in the survey, estimates she saves $30 a week thanks to cheaper gasoline but has no plans for big purchases, in part because she worries low prices will not last.

Some economists say such doubts and the still-fresh scars of the 2007-2009 recession could explain the muted effect of cheap gas on consumption. For example, the economy only in mid-2014 recovered the more than 7 million jobs lost during the downturn.

“We don’t seem to be getting the benefits from cheaper gasoline that we did when the economy was healthier,” said veteran oil economist and independent consultant Phil Verleger.

Dallas Federal Reserve President Robert Kaplan said another reason Americans appeared wary of spending what they saved at the pump could be that more and more of them were approaching retirement.

“They are conscious of that (and) they need to save more,” Kaplan told Reuters in an interview.

HALF THE BENEFIT

The Dallas Fed, whose area includes the oil patches of Texas, Louisiana and New Mexico, estimates that a 50 percent fall in oil prices now adds around 0.5 percentage points to economic growth over a year, half of the impact seen before America’s oil boom.

One reason is that the oil sector has grown over the past decade, so spending and job cuts there weigh more on the whole economy. Cheaper oil also helps less because cars and machinery have become more fuel efficient, according to the Dallas Fed.

Thanks to hydraulic fracturing and shale drilling boom that made the United States the world’s top oil producer in 2014, the nation also imports less oil than ever.

That goes to explain why in the public eye the modest benefits of cheap energy enjoyed by all get overshadowed by the havoc the oil slump wreaked in the energy sector and the nation’s oil patches.

Tumbling prices forced producers and oilfield services companies to slash budgets, driving some into bankruptcy and many deep into the red. Markets have grown so bearish about the sector that when oil producer Hess <HES.N> reported a fourth quarter loss of over $1.8 billion, its shares have risen because investors had braced for even more damage.

Yet even as job losses and lost tax revenues hit oil-producing states such as Texas or Alaska, the drag on the U.S. economy as a whole has been limited.

The oil-dominated mining sector accounted for just 1.6 percent of GDP in the third quarter and jobs in oil and gas extraction and services account for 0.3 percent of U.S. employment, down from 0.4 percent during the boom years. (http://tmsnrt.rs/1JZSj7d)

The investment in U.S. mining structures, which is dominated by oil and gas exploration and well drilling, has fallen at a $70 billion annual rate since the fourth quarter of 2014, according to Commerce Department data. Yet as Goldman Sachs estimates the overall drop in energy investment subtracted only about 0.3 percentage points from 2015 economic growth.

Barclays economist Michael Gapen forecasts that a further decline in energy investment could knock another 0.2 percent from this year’s U.S. economic output.

The U.S. job market also appears robust enough to absorb job losses in the energy sector and related industries. Goldman Sachs estimates such losses at 30,000 to 35,000 a month, but that compares with 292,000 jobs U.S. economy as a whole added last month.

(Reporting by Jason Lange and Lindsay Dunsmuir; Editing by David Chance and Tomasz Janowski)

Wall Street rallies to close out rough January

(Reuters) – Wall Street surged over 2 percent on Friday after the Bank of Japan unexpectedly cut interest rates and Microsoft led a major rally in technology shares, repairing some of the damage to the S&P 500’s worst January since 2009.

Slammed by collapsing oil prices that have fed doubts about the health of the global economy, stocks have had a volatile start to the year. At one point last week, the S&P’s loss for 2016 reached 11 percent before recovering to end the month down 5 percent.

The index rose 2.48 percent on Friday, its strongest day since September.

“Sentiment certainly had swung to a wildly negative scenario. In the short term, I’m not sure the sentiment backdrop we’ve seen was warranted,” said Michael Church, president of Addison Capital Management in Philadelphia.

“What happens if there is not a recession? What happens if China stabilizes and the Fed doesn’t raise rates aggressively?”

Global equities got a surprise boost on Friday after Japan’s central bank cut a benchmark rate below zero to stimulate its economy.

Stocks were also lifted by weak fourth-quarter U.S. gross domestic product growth data, which bolstered arguments that the Federal Reserve might go slower than expected on future rate hikes.

While the Fed has not ruled out a rate hike in March, many investors believe recent global economic and financial turmoil may lead it to wait.

Microsoft shares jumped 5.83 percent on better-than-expected results.

The software company was the biggest influence on the S&P 500 and the Nasdaq and helped push the S&P tech sector up 3.6 percent, its strongest session since August.

Fourth-quarter corporate reporting season is well under way, with S&P 500 companies on average expected to post a 4.1 percent drop in earnings, according to Thomson Reuters I/B/E/S. Excluding energy companies, earnings are seen rising 2.1 percent.

The Dow Jones industrial average ended 2.47 percent higher at 16,466.30 while the S&P 500 gained 46.88 points or 2.48 percent higher to end at 1,940.24.

The Nasdaq Composite surged 2.38 percent to 4,613.95.

For the week, the Dow gained 2.3 percent, the S&P added 1.7 percent and the Nasdaq increased 0.5 percent.

That left the Dow down 5.5 percent for the month and the Nasdaq 7.9 percent lower, its largest monthly loss since May 2010.

In Friday’s trading, Amazon slumped 7.61 percent after its quarterly profit missed expectations.

Xerox gained 5.63 percent after announcing a deal with Carl Icahn to split itself into two.

U.S. crude oil rose 1.4 percent after trimming early gains on a report that Iran would not participate in a possible deal between OPEC and other producing countries to reduce output.

Advancing issues outnumbered decliners on the NYSE by 2,789 to 339. On the Nasdaq, 2,290 issues rose and 584 fell.

The S&P 500 index showed 16 new 52-week highs and seven new lows, while the Nasdaq recorded 28 new highs and 100 new lows.

About 10.0 billion shares changed hands on U.S. exchanges, above the 8.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski and James Dalgleish)

U.S. economy hits soft patch in fourth quarter as inventories, trade weigh

WASHINGTON (Reuters) – U.S. economic growth braked sharply in the fourth quarter as businesses stepped up efforts to reduce an inventory glut and a strong dollar and tepid global demand weighed on exports.

Gross domestic product increased at a 0.7 percent annual rate, the Commerce Department said on Friday in a report that showed a further cutback in investment by energy firms grappling with lower oil prices. Growth in consumer spending also slowed as unseasonably mild weather cut into spending on utilities.

But with the labor market strengthening and some of the impediments to growth largely temporary, economists expect output to pick up in the first quarter of 2016. First-quarter growth estimates are for now mostly above a 2 percent rate.

“The economy took its lumps late last year. It’s not going to be smooth sailing in 2016, but we don’t see the ship sinking either, and the rising concern about a recession later on this year triggered by China, those fears need a reality check,” said Chris Rupkey, chief economist at MUFG Union Bank in New York.

The Federal Reserve on Wednesday acknowledged that growth “slowed late last year,” but also noted that “labor market conditions improved further.” The U.S. central bank raised interest rates in December for the first time since June 2006.

Though the Fed has not ruled out another hike in March, weaker growth and financial markets volatility could see that delayed until June. Excluding inventories and trade, the economy grew at a 1.6 percent pace in the fourth quarter.

The fourth-quarter growth pace was in line with economists’ expectations and followed a 2 percent rate in the third quarter. The economy grew 2.4 percent in 2015 after a similar expansion in 2014.

The GDP data, together with a surprise decision by the Bank of Japan to cut a benchmark interest rate below zero in a bold move to stimulate the Japanese economy, buoyed the dollar against a basket of currencies. Prices for U.S. Treasuries rose and U.S. stocks were trading higher.

In the fourth quarter, businesses accumulated $68.6 billion worth of inventory. While that was down from $85.5 billion in the third quarter, it was a bit more than economists had expected, suggesting inventories could remain a drag on growth in the first quarter.

The small inventory build subtracted 0.45 percentage point from the first estimate of fourth-quarter GDP growth.

LIMITED SPILLOVER

Consumer spending, which accounts for more than two thirds of U.S. economic activity, increased at a 2.2 percent rate. Though that was a step-down from the 3.0 percent pace notched in the third quarter, the gain was above economists’ expectations.

Unusually mild weather hurt sales of winter apparel in December and undermined demand for heating through the quarter.

With gasoline prices around $2 per gallon, a tightening labor market gradually lifting wages and house prices boosting household wealth, economists believe the slowdown in consumer spending will be short-lived.

“The consumer will continue to power ahead, as spillovers from the weak mining and manufacturing sector to services industries remain limited,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.

Income at the disposal of households after accounting for taxes and inflation increased 3.2 percent in the fourth quarter after rising 3.8 percent in the prior period. Savings rose to a lofty $739.3 billion from $700.6 billion in the third quarter.

While a separate report from the University of Michigan showed a dip in its consumer sentiment index in January because of the recent stock market sell-off, consumer optimism remained at levels consistent with steady economic growth.

The dollar, which has gained 11 percent against the currencies of the United States’ trading partners since last January, remained a drag on exports, leading to a trade deficit that subtracted 0.47 percentage point from GDP growth in the fourth quarter.

The downturn in energy sector investment put more pressure on business spending on nonresidential structures. Spending on mining exploration, wells and shafts dropped at a 38.7 percent rate after plunging at a 47.0 percent pace in the third quarter.

Investment in mining exploration, wells and shafts fell 35 percent in 2015, the largest drop since 1986.

As oil prices appear to level off, the energy sector drag on the economy is expected to ease in the coming quarters. Oil prices have plummeted more than 60 percent since mid-2014, forcing oil field companies such as Schlumberger <SLB.N> and Halliburton <HAL.N> to slash their capital spending budgets.

Business spending on equipment contracted at a 2.5 percent rate last quarter after rising at a 9.9 percent pace in the third quarter. Investment in residential construction remained a bright spot, rising at a 8.1 percent rate.

With consumer spending softening, inflation retreated in the fourth quarter. A price index in the GDP report that strips out food and energy costs increased at a 1.2 percent rate, slowing from a 1.4 percent pace in the third quarter.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Facebook ‘likes’ help boost Wall Street

(Reuters) – Wall Street climbed on Thursday as a blockbuster quarterly report from Facebook drove tech shares higher and a bounce in oil prices propped up the beleaguered energy sector.

Facebook surged 15.5 percent in its biggest one-day leap since 2013 after the digital advertising behemoth smashed expectations with a 52-percent jump in fourth-quarter revenue.

Helped also by a 4.28-percent gain in Alphabet, the S&P tech sector surged 1.48 percent.

The S&P energy sector rallied 3.15 percent, buoyed by a rise of almost 3 percent in oil prices due to speculation that Saudi Arabia and other OPEC countries would cut output to boost prices.

Optimism sparked by earnings from Facebook and a handful of other companies, as well as the bounce in oil prices, was behind most of the day’s improved sentiment, investors said.

But they also warned the gains could be short-lived and that a steep selloff this year caused by weak oil and worries about China’s economy may not be exhausted. The S&P remains down 7 percent for 2016.

“You had marquee names with pretty good earnings,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “I’d love to say we’re onward and upward from here but I don’t think things work that way.”

The Dow Jones transport average, which Carlson said was a good indicator of the economy’s health, fell 0.8 percent.

Others remained cautious after comments by the U.S. Federal Reserve’s Open Market Committee on Wednesday did not more strongly signal it could scale back the pace of future interest rate hikes in the wake of recent turmoil in global markets.

“The FOMC’s statement was less dovish than anticipated and very likely may have marked a top in the recent rebound we have seen,” warned Mohannad Aama, Managing Director, Beam Capital Management LLC in New York.

The Nasdaq biotech index lost 3.5 percent and was on track for its biggest monthly fall in 16 years.

Abbott Labs was the biggest drag on the healthcare sector, with a 9.3-percent drop.

The Dow Jones industrial average gained 0.79 percent to end at 16,069.64 points while the S&P 500 added 0.55 percent to 1,893.36. The Nasdaq Composite rose 0.86 percent to 4,506.68.

After the bell, Amazon slumped 11 percent after its quarterly report let down investors. Ahead of the report, it had risen 8.9 percent.

During the session, PayPal surged 8.39 percent and Under Armour jumped 22.59 percent. Revenue at both companies beat estimates.

Among the losers, eBay sank 12.45 percent after it forecast weaker-than-expected quarterly revenue and profit.

Advancing issues outnumbered decliners on the NYSE by 2,054 to 1,032. On the Nasdaq, 1,470 issues rose and 1,312 fell.

The S&P 500 index showed eight new 52-week highs and 24 new lows, while the Nasdaq recorded 13 new highs and 166 new lows.

About 8.8 billion shares changed hands on U.S. exchanges, above the 8.6 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski)

Lower oil prices squeezing U.S. manufacturing sector

WASHINGTON (Reuters) – New orders for long-lasting U.S. manufactured goods in December recorded their biggest drop in 16 months as lower oil prices and a strong dollar pressured factories, the latest indication that economic growth braked sharply at the end of 2015.

Despite the slowdown in growth, which was acknowledged by the Federal Reserve on Wednesday, the labor market remains on solid ground. First-time filings for jobless benefits retreated from a six-month high last week, other data showed on Thursday.

Economists have expressed worries that the energy sector slump and drag from a strong dollar are spilling over to other parts of the economy, which would lead to continued weakness in early 2016.

“U.S. companies are cutting investment sharply, and the key worry is that it seems to be spreading beyond the oil sector and in the meantime consumers are missing in action, not able to offset the huge drag from the energy sector,” said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.

The Commerce Department said durable goods orders plunged 5.1 percent last month, the biggest drop since August 2014, after slipping 0.5 percent in November. The decline was generally broad-based, with orders for transportation equipment plunging 12.4 percent and bookings for non-defense aircraft plummeting 29.4 percent.

The drop in aircraft orders is surprising as Boeing received orders for 223 aircraft in December, up from 89 planes the prior month, according to information posted on its website.

Economists had forecast durable goods orders falling only 0.6 percent last month. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 4.3 percent in December, the largest drop in 10 months. These so-called core capital goods orders fell 1.1 percent in November. The decline in orders for both durable and capital goods adds to weak data on retail sales, industrial production, exports and business inventories, suggesting the economy slowed sharply in the fourth quarter.

Apart from the buoyant dollar and spending cuts by energy firms bruised by the slump in oil prices, the economy has been blindsided by anemic demand overseas and business efforts to trim an inventory overhang. The growth outlook has been dimmed by the recent stock market selloff.

According to a Reuters survey of economists, the government is expected to report on Friday that fourth-quarter gross domestic product increased at a 0.8 percent annual rate after notching a 2 percent pace in the third quarter. There is, however, a risk that output contracted in the fourth quarter.

The U.S. dollar extended losses against the euro after the data and was down against a basket of currencies. Stocks were largely flat as were prices for U.S. government debt.

DOUR REPORT

The Fed said on Wednesday “economic growth slowed late last year” and noted that business fixed investment has been increasing at a “moderate” pace in recent months.

The U.S. central bank left its benchmark overnight interest rate unchanged and said it was “closely monitoring global economic and financial developments” to assess their impact on the U.S. labor market and inflation.

Economists said the dour durable goods orders report could heighten the Fed’s concerns about the impact of global headwinds and the fallout from the dollar, which has gained 11 percent against the currencies of the United States’ main trading partners since last January.

“While some of this slowdown is likely to be reversed in coming quarters, it will continue to argue for caution at the Fed about whether the economy can handle a further tightening in monetary policy in the near term,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

The Fed raised rates in December for the first time in nearly a decade.

Weak oil prices have eroded the profits of energy companies, forcing oilfield service firms like Schlumberger and Halliburton to cut capital spending budgets.

Oil prices have dropped more than 60 percent since mid-2014.

Pointing to weak business spending in the fourth quarter, shipments of core capital goods – used to calculate equipment spending in the GDP report – fell for a third straight month in December. Unfilled core capital goods orders declined 1.0 percent, the biggest drop in nearly six years. In a second report, the Labor Department said initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 278,000 during the week ended Jan. 23. The drop almost reversed the prior two weeks’ increases.

It was the 47th straight week that claims remained below the 300,000 mark, which is associated with strong labor market conditions. That is the longest stretch since the early 1970s.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao)

Wall Street sinks after Fed fails to impress

(Reuters) – Wall Street dropped sharply on Wednesday after the U.S. Federal Reserve frustrated stock investors hoping for a strong sign it might scale back future interest rate hikes because of recent financial and economic turmoil.

In a widely expected decision, the Fed kept interest rates unchanged and it said it was “closely monitoring” global economic and financial developments, but it maintained an otherwise upbeat view of the U.S. economy.

With plummeting oil prices and fears of slower economic growth in China sending the S&P 500 down 8 percent in 2016, investors saw the Fed’s conciliatory comments as a step in the right direction.

But some on Wall Street had hoped an even stronger indication that policymakers might scale back the pace of future interest rate hikes.

“It sounds like they are unimpressed with what has happened in the markets, that it has been insufficient to change their plans. That’s the takeaway and it’s why the market is going down,” said Stephen Massocca, Chief Investment Officer of Wedbush Equity Management LLC in San Francisco.

That was enough to reverse earlier gains driven by a jump in crude prices after Russia said it was discussing the possibility of cooperation with OPEC and U.S. data showed an increase in short-term demand.

With fourth-quarter corporate reports pouring in, earnings of S&P 500 companies on average are expected to drop 4.9 percent, according to Thomson Reuters data. Excluding energy, earnings are expected to grow 1.3 percent.

The Dow Jones industrial average ended down 1.38 percent at 15,944.32 points while the S&P 500 lost 20.68 1.09 percent to 1,882.95. The Nasdaq Composite dropped 2.18 percent to 4,468.17.

Eight of the 10 major S&P sectors fell, led by the tech sector’s 2.46-percent descent.

Apple’s shares fell 6.57 percent after the iPhone maker reported its slowest-ever rise in shipments on Tuesday, while Boeing lost 8.9 percent, its biggest fall since August 2011.

Textron slid 13.36 percent while Tupperware sank 14.8 percent. Both companies’ revenue missed estimates.

A weaker-than-expected 2016 forecast helped push VMware shares down 9.82 percent.

Among the few gainers, Biogen rose 5.15 percent after its profit and revenue beat expectations.

After the bell, Facebook posted fourth-quarter revenue above expectations and its stock rose 4.7 percent.

Declining issues outnumbered advancing ones on the NYSE by 1,900 to 1,145. On the Nasdaq, 1,943 issues fell and 816 rose.

The S&P 500 index showed three new 52-week high and seven new lows, while the Nasdaq recorded 10 new highs and 89 lows.

About 8.8 billion shares changed hands on U.S. exchanges, below the 8.5 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D’Silva and Nick Zieminski)

Fed keeps interest rates steady, closely watching global markets

WASHINGTON (Reuters) – The U.S. Federal Reserve kept interest rates unchanged on Wednesday and said it was “closely monitoring” global economic and financial developments, signaling it had accounted for a stock market selloff but wasn’t ready to abandon a plan to tighten monetary policy this year.

The decision by the central bank’s rate-setting committee was widely expected after a month-long plunge in U.S. and world equities raised concerns an abrupt global slowdown could drag on U.S. growth.

Fed policymakers said the economy was still on track for moderate growth and a stronger labor market even with “gradual” rate increases, suggesting its concern about global events had diminished but not squashed chances of a rate hike in March.

“The committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation,” the Fed said in its policy statement following a two-day meeting.

Wall Street fell after the statement, with the Standard & Poor’s 500 index closing down more than 1 percent. Prices for U.S. Treasuries were mixed, while the dollar extended losses against a basket of currencies.

In an indication the Fed was taking global risks seriously, a prior reference to the risks to the economic outlook being “balanced” was removed from its statement. Instead, it said it was weighing how the global economy and financial markets could affect the outlook.

“It is clear that several FOMC members have become more worried,” said Harm Bandholz, an economist at Unicredit in New York, referring to the Fed’s rate-setting Federal Open Market Committee.

Shrugging off economic weakness in China, Japan and Europe, the Fed last month raised its key overnight lending rate by a quarter point to a range of 0.25 percent to 0.50 percent and issued upbeat economic forecasts that suggested four additional hikes this year.

Wall Street’s top banks, however, expect only three rate increases before the end of the year, according to a Reuters poll released after the Fed’s statement on Wednesday. That was in line with expectations earlier in January.

Investors are betting on one quarter-point rate increase in 2016.

Prices for Fed funds futures on Wednesday showed traders had pushed back bets for the next rate hike to July from June and modestly trimmed bets on a March hike.

“The Fed has maintained its composure in the face of global pressures,” said Joe Manimbo, an analyst at Western Union Business Solutions.

JOB GAINS

U.S. exports took a hit last year, largely due to the impact of a strong dollar, but consumer spending accelerated and overall employment surged by 292,000 jobs in December.

The Fed said on Wednesday that a range of recent labor market indicators, including “strong” job gains, pointed to some additional firming in the job market.

Oil prices have also plummeted this year, which could keep U.S. inflation below the Fed’s 2 percent target for longer, but the central bank said it still expects the downward inflationary pressure from lower energy and import prices to prove temporary.

Policymakers will be able to sift through the January and February U.S. employment reports before their next policy meeting in March.

(Reporting by Jason Lange and Howard Schneider; Additional reporting by Lindsay Dunsmuir; Editing by David Chance and Paul Simao)

Oil fuels ‘schizophrenic’ rebound on Wall Street

(Reuters) – Wall Street rebounded over 1 percent on Tuesday, driven by a surge in oil prices and strong quarterly results from 3M, Johnson & Johnson and Procter & Gamble.

All 10 major S&P sectors ended higher, led by a 3.78-percent rise in the energy sector. Crude prices settled up 3.7 percent on hopes that OPEC and non-OPEC producers would tackle an unrelenting supply glut.

With oil at 12-year lows and threatening to put higher-cost producers out of business, investors have been reeling from a turbulent start to the year that has left the S&P down 7 percent from the end of 2015.

“This is a schizophrenic market. Big up days, big down days. No real direction,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York. “We need some stability in oil prices for the markets to calm down from here and become less volatile.”

Laser-focused on Tuesday’s rebound in crude prices, Wall Street shrugged off a 6 percent slump overnight in Chinese shares, sparked by jitters over Beijing’s ability to calm domestic markets.

That left the gap between U.S. and Chinese stock indexes at its widest since at least August.

The Dow Jones industrial average ended 1.78 percent higher at 16,167.23 points and the S&P 500 gained 1.41 percent to 1,903.63.

The Nasdaq Composite added 1.09 percent to 4,567.67.

While the U.S. Federal Reserve is not expected to move on interest rates at its two-day meeting, which began on Tuesday, investors will parse the Fed’s commentary to gauge how recent global turmoil affects the likelihood of future rate hikes.

Johnson & Johnson was the biggest influence on the S&P, up 4.96 percent, while Procter & Gamble rose 2.55 percent. Both companies reported profits that beat estimates.

Exxon climbed 3.68 percent, while Chevron rose 3.99 percent.

3M jumped 5.24 percent, giving the biggest boost to the Dow, after better-than-expected quarterly profit.

Overall profit expectations remain weak, largely because of oil. Earnings of S&P 500 companies on average are expected to fall 4.9 percent, according to Thomson Reuters data. Excluding energy, earnings are expected to grow 1.1 percent.

About 7.9 billion shares changed hands on U.S. exchanges, below the 8.2 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Advancing issues outnumbered decliners on the NYSE by 2,591 to 507. On the Nasdaq, 2,010 issues rose and 809 fell.

The S&P 500 index showed three new 52-week highs and seven new lows, while the Nasdaq recorded eight new highs and 75 lows.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski)

Wall Street resumes 2016 slide as energy stocks tumble

(Reuters) – Wall Street sold off on Monday, pulled lower by further weakness in oil prices as energy shares led declines, with major indexes retreating after last week’s strong gains.

Oil prices fell 6 percent on concerns of oversupply after news that Iraq’s output reached a record last month.

The S&P energy group dropped 4.5 percent, the worst performing sector. Exxon and Chevron each fell more than 3 percent, while ConocoPhillips tumbled 9.2 percent after Barclays said the company should cut its dividend by at least 75 percent.

The major indexes each fell more than 1 percent, reversing much of a two-session rally that marked Wall Street’s first week of gains in the year. All 10 major S&P sectors finished the session lower.

During the poor start for the year for U.S. stocks, their performance has closely correlated with the price of oil. The commodity’s dramatic 1-1/2-year slide has sparked broad concerns about a global economic slowdown.

“Today is all about oil,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

“Better oil markets Thursday and Friday led to better equity markets. A $2 retracement in oil today, it’s not surprising to see a retracement in the equity indices.”

The Dow Jones industrial average fell 208.29 points, or 1.29 percent, to 15,885.22, the S&P 500 lost 29.82 points, or 1.56 percent, to 1,877.08 and the Nasdaq Composite dropped 72.69 points, or 1.58 percent, to 4,518.49.

Investors will look for insight about the economy’s direction later this week as many heavyweight companies report results. Federal Reserve policymakers meet on Tuesday and Wednesday for the first time since raising interest rates in December.

“The macroeconomic reality is catching up to equity valuations, and you’re seeing folks say, ‘I’m going to take my winnings and get out of the way for a while,'” said Jeff Buetow, chief investment officer at Innealta Capital in Austin, Texas.

D.R. Horton shares fell 4.7 percent to $26.40 as the No. 1 U.S. homebuilder reported lower-than-expected revenue as its home sales fell in all regions but the Southeast.

Tyco International jumped 11.6 percent to $34.15 after Johnson Controls said it would merge with the Ireland-based fire protection and security systems maker. Johnson Controls dropped 3.9 percent to $34.21.

Shares of Dynegy and NRG Energy slumped 11.5 percent and 9.6 percent, respectively, after the U.S. Supreme Court upheld a major Obama administration electricity markets regulation.

Caterpillar dropped 5 percent to $57.91 after Goldman Sachs cut its rating on the stock to “sell”.

Twitter fell 4.6 percent to $17.02 after Chief Executive Jack Dorsey said four senior executives would leave the social media company.

About 7.9 billion shares changed hands on U.S. exchanges, slightly below the 8.1 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Declining issues outnumbered advancing ones on the NYSE by 2,642 to 466, for a 5.67-to-1 ratio on the downside; on the Nasdaq, 2,132 issues fell and 716 advanced for a 2.98-to-1 ratio favoring decliners.

The S&P 500 posted 3 new 52-week highs and 22 new lows; the Nasdaq recorded 12 new highs and 103 new lows.

(Reporting by Lewis Krauskopf in New York, additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D’Silva and Nick Zieminski)