Tag Archives: Global Economy

Wall Street dips as healthcare lags before Fed statement

NEW YORK (Reuters) – Healthcare and materials stocks pulled Wall Street lower on Tuesday in a second straight day of quiet trading as investors cautiously awaited news from the U.S. Federal Reserve’s two-day policy meeting.

While the Fed is not expected to raise interest rates at its meeting ending on Wednesday, investors will scour Fed Chair Janet Yellen’s comments for clues indicating a path for future rate hikes.

“We’re on auto pilot until we actually get the results of the Fed meeting tomorrow afternoon,” said Art Hogan, chief market strategist at Wunderlich Securities in New York. “It’s not unusual to (be in) wait-and-see mode as you head into a big announcement.”

Ahead of the Fed meeting’s outcome, smaller stocks sold off more than bigger ones as investors sought to reduce risk, said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

U.S. retail sales fell less than expected in February, but a sharp downward revision to January’s data could reignite concerns about the economy’s growth prospects.

The Dow Jones industrial average ended up 22.4 points, or 0.13 percent, at 17,251.53, the S&P 500 lost 3.71 points, or 0.18 percent, to 2,015.93 and the Nasdaq Composite dropped 21.61 points, or 0.45 percent, to 4,728.67.

Healthcare was the worst-performing sector, dropping 1.6 percent.

Valeant Pharmaceuticals International Inc plunged 51.5 percent to $33.51 in its busiest-ever trading day. The Canadian drugmaker cut its 2016 revenue forecast and flagged the risk of defaulting on its debt, eroding investor confidence in the troubled company.

Allergan dropped 3.4 percent to $283. The stock was the biggest drag on the S&P 500.

Materials stocks fell 0.91 percent.

Apple shares climbed 2 percent to $104.58 after Morgan Stanley said March iPhone demand was tracking ahead of expectations. Apple was the biggest boost to the S&P 500.

Mead Johnson rose 11 percent to $83.79 with traders attributing gains to a report that sparked deal chatter.

About 6.5 billion shares changed hands on U.S. exchanges, below the 8.2 billion average over the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by 2,256 to 787, for a 2.87-to-1 ratio on the downside; on the Nasdaq, 2,114 issues fell and 707 advanced for a 2.99-to-1 ratio favoring decliners.

The S&P 500 posted 19 new 52-week highs and 1 new low; the Nasdaq recorded 30 new highs and 44 new lows.

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

Crude oil drops, dollar gains as markets watch central banks

NEW YORK (Reuters) – Oil prices fell on Monday as Iran dashed hopes of a coordinated production freeze, while the dollar rose ahead of a policy meeting at the U.S. central bank.

A gauge of stocks across the globe ticked up, with Wall Street weighed by commodity shares as Europe rose partly on a positive view of the auto industry.

Attention switched this week to policy decisions from the Bank of Japan, the U.S. Federal Reserve and the Bank of England, among others. They follow last week’s interest rate cut, asset-purchase program extension and new cheap loans for banks pledge at the European Central Bank.

The Fed, which ends its two-day policy meeting on Wednesday, has said it is on track to raise rates gradually in 2016, but doing so will hinge on the health of the economy. Recent data has shown above-forecast jobs creation but wage growth remains a concern.

The euro, which rose last week after ECB President Mario Draghi signaled further rate cuts were unlikely, fell 0.5 percent on Monday to $1.1098. The yen was flat against the greenback while sterling fell 0.6 percent to $1.4302. The dollar index rose 0.5 percent.

“It’s the combination of a market that overextended in the opposite direction because of Draghi’s ‘no more rate cut’ comment and just some corrective natural price action into the risk of (a Fed meeting) that could be a little bit more hawkish,” said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

On Wall Street, the S&P 500 was weighed by declines in basic materials and energy shares as commodity prices fell. As they also wait on the release of economic data, including U.S. retail sales, investors continued to interpret the ECB’s move.

“To me, it’s one of those days were the (stock) market is doing its best to digest some of those factors and to see what’s next,” said Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.

Equity volume on U.S. exchanges was the lightest so far this year.

The Dow Jones industrial average rose 15.82 points, or 0.09 percent, to 17,229.13, the S&P 500 lost 2.55 points, or 0.13 percent, to 2,019.64 and the Nasdaq Composite added 1.81 points, or 0.04 percent, to 4,750.28.

The pan-European FTSEurofirst 300 index, which had climbed 2.7 percent on Friday, ended up 0.67 percent with an index of auto and auto parts shares up 1.56 percent. MSCI’s gauge of stocks across major markets ticked up 0.1 percent. Nikkei futures rose 0.4 percent.

Brent crude oil, whose rise has helped buoy stocks in recent weeks, fell below $40 a barrel, as U.S. crude stockpiles continue to mount and Iran maintained little interest in a global production freeze.

“We feel that the bulk of this stronger than expected 5-6 week price advance has been seen and that prices will be shifting into a near term consolidation phase,” said Jim Ritterbusch of Chicago energy consultancy Ritterbusch & Associates.

Brent last traded at $39.61, down 1.9 percent. U.S. crude fell 3 percent to $37.34 per barrel.

The benchmark 10-year U.S. Treasury note rose 4/32 in price to yield 1.9627 percent from 1.977 percent on Friday.

Spot gold fell 1.1 percent, last trading at $1,234. Copper dropped 0.3 percent.

(Additional reporting by Laila Kearney, Dion Rabouin, Barani Krishnan and Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski and Meredith Mazzilli)

Wall Street rallies to highest close of 2016

NEW YORK (Reuters) – Wall Street rallied on Friday in a delayed response to the European Central Bank’s stimulus measures announced Thursday, while higher oil prices drove up energy shares.

The S&P 500 closed at its highest level of the year and above its 200-day moving average for the first time since Dec. 30.

The Dow Jones industrial average rose 218.18 points, or 1.28 percent, to 17,213.31, the S&P 500 gained 32.62 points, or 1.64 percent, to 2,022.19 and the Nasdaq Composite added 86.31 points, or 1.85 percent, to 4,748.47.

(Reporting by Laila Kearney; Editing by Nick Zieminski)

Wall Street ends flat as European Central Bank disappoints

(Reuters) – U.S. stock indexes ended a volatile session little changed on Thursday after the European Central Bank reduced interest rates but ECB chief Mario Draghi confounded investors who expected multiple rate cuts by saying more were unlikely.

Stocks jumped early in the day after the ECB pushed its deposit rate deeper into negative territory and increased its asset-buying program to 80 billion euros a month from 60 billion in an effort to boost growth in the region.

“The world was really, really happy with this mainly because we’re all addicted to zero interest rates,” said Kim Forrest, research analyst at Fort Pitt Capital Group in Pittsburgh. “It’s free money.”

When Draghi said future cuts would happen only under extreme circumstances, investors expecting even lower rates switched their strategy to risk off, Forrest said.

At the same time, she said, fears that lower interest rates in Europe would harm U.S. banks and negatively impact exports by leading to euro devaluation weighed on the market further.

The Dow Jones industrial average fell 5.23 points, or 0.03 percent, to 16,995.13, the S&P 500 gained 0.31 points, or 0.02 percent, to 1,989.57 and the Nasdaq Composite dropped 12.22 points, or 0.26 percent, to 4,662.16.

U.S. jobless claims fell more than expected last week to their lowest levels since October, pointing to sustained strength in the labor market that should further dispel fears of a recession.

The U.S. Federal Reserve has said it is on track to raise interest rates gradually this year, but its decision remains data-dependent. The Fed is to meet on March 15-16.

Shares of Dollar General were up 10.7 percent to $83.23 after it reported better-than-expected same-store sales growth. Rival Dollar Tree was up 4 percent.

Declining issues outnumbered advancing ones on the NYSE by a 1.33-to-1 ratio while on the Nasdaq, a 1.85-to-1 ratio favored decliners.

The S&P 500 posted 30 new 52-week highs and two new lows; the Nasdaq recorded 52 new highs and 70 new lows.

Volume on U.S. exchanges was 8.42 billion shares, compared with the 8.54 billion daily average over the last 20 sessions.

Crude oil prices, a major driver of the market so far this year, delinked from stocks, at least for this session. Brent futures fell more than 2 percent after Reuters reported that a proposed meeting between major oil producers to discuss an output cut was unlikely to take place without Iran’s participation. U.S. crude fell 1 percent.

(Reporting by Laila Kearney; Editing by Dan Grebler)

Oil rally lifts Wall Street again, extending tight correlation

(Reuters) – U.S. stocks rose in low volume on Wednesday, led once more by the direction of the price of oil and energy sector shares.

Crude oil and U.S. equity prices have been linked for much of 2016 to a degree that has surprised many investors. Wednesday’s market action extended that trend, with WTI crude rising nearly 5 percent and the S&P 500 energy sector up 1.5 percent. Chevron jumped 4.6 percent to $92.82 and gave the biggest boost to the energy sector.

“It’s not about oil being a barometer of the global economy,” said Art Hogan, chief market strategist at Wunderlich Securities in New York. “A lot of it has to do with psychology.”

U.S. crude and the S&P 500 have been directionally correlated on all but six trading days this year, according to Wunderlich data.

“Stability in that asset class (oil) for a period of time will allow for the correlation to break down,” said Hogan.

Since Feb. 11, the S&P 500 has gained 8.8 percent, but it is still down 2.7 percent for the year.

The Dow Jones industrial average rose 36.26 points, or 0.21 percent, to 17,000.36, the S&P 500 gained 10 points, or 0.51 percent, to 1,989.26 and the Nasdaq Composite added 25.55 points, or 0.55 percent, to 4,674.38.

In a week with a thin economic data calendar, markets will turn to the European Central Bank, which is expected to further ease monetary policy on Thursday.

Biotechnology stocks came under pressure a day after the U.S. government proposed a test program that would lower incentives to use higher-priced drugs when alternative treatments are available.

The Nasdaq Biotechnology sector fell 1.2 percent with Regeneron Pharmaceuticals down 5.1 percent to $374.75 as the largest decliner on the Nasdaq 100.

Chipotle Mexican Grill lost 3.4 percent to $506.63. Already reeling from several food-borne illnesses, the company temporarily shut a Massachusetts restaurant after four employees fell sick.

Advancing issues outnumbered declining ones on the NYSE on a 2.3-to-1 ratio while on the Nasdaq a 1.50-to-1 ratio favored advancers.

The S&P 500 posted 27 new 52-week highs and 1 new lows; the Nasdaq recorded 48 new highs and 41 new lows.

About 7.5 billion shares changed hands in U.S. exchanges, compared with the average 8.67 billion in the previous 20 sessions.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

Wall Street bids Happy Birthday to bull market for stocks

NEW YORK (Reuters) – Wednesday marks the seven-year anniversary of the start of the current bull market for U.S. stocks, one that has shaped up to be more notable for its duration than its intensity.

The current bull run of 84 months is the third-longest on record, with the average lasting slightly less than 59 months, according to S&P Dow Jones Indices.

Though also above average, the gains are somewhat less impressive, with the S&P 500 stock index up 193 percent, fifth among 13 bull markets since the Great Depression. The average bull market climb is 167 percent.

The Dow Jones industrial average and Nasdaq Composite, also bottomed on March 9, 2009. They grew about 159 percent and 266 percent, respectively, since then.

The bull started from a low point after the Great Recession and the financial crisis pushed stocks down 56.3 percent from the S&P’s October 2007 high of 1,565.15 to 676.53.

A technicality might make Wednesday’s whole birthday celebration moot. The S&P index actually peaked on May 21 and has yet to go above that. Should it fall more than 20 percent from that high of 2,130.82, it will confirm that the great bull actually ended back in May, and the market has technically been in a bear since then.

To confirm that the bull rolls on, the S&P will have to eclipse that high and continue its upward trajectory.

That’s far from certain. Stocks have struggled early in the year, with the S&P off 3.2 percent for 2016 and 3.9 percent below the May high. With relatively weak earnings and some concerns about global growth, it’s not clear stocks can resume their upward march.

“It has been long, it has been at times grueling, and it is tired,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, in Berkeley Heights, New Jersey.

The market has room to move up, Kenny said, if corporate earnings and revenues can show signs of growth that would reveal stronger economic growth.

That would justify higher share prices for investors – and a more enthusiastic birthday celebration.

(Reporting by Chuck Mikolajczak; editing by Linda Stern and Nick Zieminski)

Oil drop, China data drag Wall Street lower

(Reuters) – U.S. stocks ended near the lows of the day on Tuesday as energy shares tumbled alongside the price of oil and soft Chinese trade data rekindled fears that the global economy is weaker than anticipated.

U.S. crude futures fell more than 4 percent in post-settlement trading, in their largest daily decline since bottoming so far for the year on Feb. 11. Since that low, the U.S. barrel of crude rose as much as 45.5 percent.

Despite the rebound in crude prices, oversupply and expectations of weak demand from China have weighed on investor sentiment. The price of oil and equity indexes have been strongly correlated this year.

“While I’d love to see oil break out, I don’t think it will happen yet,” said Uri Landesman, president at Platinum Partners in New York.

Goldman Sachs analysts said the recent rally in oil was premature as prices would need to remain lower for longer to help rebalance the market later in the year.

Shares of Dow components Exxon and Chevron fell more than 2 percent. The S&P 500 energy index dropped 4.1 percent.

China’s February trade performance was far worse than economists had expected, with exports tumbling the most in more than six years. The 16th-straight monthly decline in imports weighed on stocks in the basic materials sector, which was down 2 percent.

Landesman said the S&P 500 is still in a downward trend and will likely stall near the 2,000 level, heading toward support near 1,825 before testing the record set last May above 2,100. The index on Monday closed above 2,000 for the first time since Jan. 5.

“It will be trading in that channel based on slow global (economic) growth prospects,” Landesman said.

The Dow Jones industrial average fell 109.85 points, or 0.64 percent, to 16,964.1, the S&P 500 lost 22.5 points, or 1.12 percent, to 1,979.26 and the Nasdaq Composite dropped 59.43 points, or 1.26 percent, to 4,648.83.

The largest percentage decliner on the Nasdaq 100 was Micron, down 7.9 percent to $10.66.

Shake Shack tumbled 11.8 percent, falling to $37.23 after the burger chain issued disappointing results and forecast.

Shares of Urban Outfitters were up 16.1 percent at $32.69, after better-than-expected sales for its Free People brand.

Declining issues outnumbered advancing ones on the NYSE by a ratio of 3.2-to-1 and on the Nasdaq a 3.5-to-1 ratio favored decliners.

The S&P 500 posted 18 new 52-week highs and 1 new low; the Nasdaq recorded 36 new highs and 37 new lows.

About 8.5 billion shares changed hands in U.S. exchanges, below the 8.77 billion average over the last 20 sessions.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

Oil prices rally, S&P 500 up for a fifth consecutive session

NEW YORK (Reuters) – Oil prices jumped on Monday as optimism rose that major producers might reach a price support deal, helping U.S. stocks to notch a fifth straight session of gains.

Brent hit its highest level since December, climbing $2.12, or 5.5 percent, to settle at $40.84 a barrel, while U.S. crude rose $1.98, or 5.5 percent, to settle at $37.90.

Oil has rallied in recent weeks amid increasing hope that OPEC producers may be moving toward a production freeze to support prices in an oversupplied market. On Monday, the Ecuadorean government said Latin American oil producers agreed to meet on Friday in Quito to coordinate a strategy to support crude oil prices.

“It’s more confirmation that oil producers are close to achieving some kind of a deal on price support,” said Phil Flynn, analyst at Price Futures Group in Chicago.

“It’s feeding bullish sentiment into a market that’s turned 180 degrees from where it stood just weeks ago.”

In other commodities markets, spot iron ore prices jumped 19 percent, helped by expectations that Chinese steel mills were planning production cuts.

A 2.4 percent gain in the S&P energy index offset a decline in technology shares, leaving the benchmark S&P 500 slightly positive for the session and extending the recent rise in stocks.

The Dow Jones industrial average gained 67.18 points, or 0.4 percent, to 17,073.95, the S&P 500 rose 1.77 points, or 0.09 percent, to 2,001.76 and the Nasdaq Composite dropped 8.77 points, or 0.19 percent, to 4,708.25.

U.S. stocks have posted gains in each of the last three weeks, thanks in part to the rebound in oil prices, after a steep sell-off at the start of the year.

MSCI’s all-country world stock index edged up 0.03 percent. In Europe, the pan-regional FTSEurofirst 300 index closed down 0.3 percent.

The dollar fell, wiping out its initial gains, as the oil rally rekindled demand for the euro and commodity-sensitive currencies.

The euro’s gains were limited by the view the European Central Bank would embark on more stimulus to support the euro zone’s fragile economic recovery at its policy meeting on Thursday.

The euro edged up 0.1 percent against the greenback to $1.1008 and slipped 0.5 percent versus the yen to 124.75 yen. The dollar index, which measures the dollar against a basket of six currencies, was down 0.2 percent at 97.132.

In the U.S. bond market, U.S. Treasury prices fell as oil prices surged and as traders increased bets in the wake of the strong February jobs report that the Federal Reserve will raise interest rates this year .

The benchmark 10-year note’s yield rose to 1.920 percent, its highest in just over a month. It was last down 6/32 in price to yield 1.902 percent, up from 1.883 percent late Friday.

(Additional reporting by Barani Krishnan in New York, Nigel Stephenson in London, Hideyuki Sano in Tokyo, Marius Zaharia and Patrick Graham in London; Editing by Nick Zieminski, Bernadette Baum and Dan Grebler)

Global stocks rise on strong U.S. jobs report, oil surge

NEW YORK (Reuters) – A gauge of stock markets worldwide rose to a two-month high on Friday, posting its largest weekly gain since October, as oil and other commodity prices firmed and strong U.S. jobs growth bolstered confidence in the global economy.

The recovery in commodities lifted emerging markets shares, which rose 1.6 percent on the day. MSCI’s emerging-market stock metric posted its largest one-week gain since December 2011.

U.S. equity indexes rose to their highest levels since early January following the jobs data, which showed strong growth in payrolls and an increase in labor-force participation, though there was a surprising decline in hourly wages.

Nonfarm payrolls grew by 242,000 jobs last month, beating forecasts for 190,000 new jobs, but average hourly wages dipped by 0.1 percent after a strong 0.5 percent increase in January.

The drop in wages suggested that U.S. inflation remained muted, analysts said. Policymakers at the Federal Reserve are watching inflation closely in their assessment of when to continue raising interest rates.

“The wage number might be the silver lining, if you will, against a more hawkish Fed over the next few months because the Fed has been really focused on inflation,” said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

A rise in the Fed’s rates generally strengthens the dollar, which makes U.S. exports more expensive and can reduce profits for companies that do business overseas.

The Dow Jones industrial average on Friday rose 62.87 points, or 0.37 percent, to 17,006.77, the S&P 500 gained 6.59 points, or 0.33 percent, to 1,999.99 and the Nasdaq Composite added 9.60 points, or 0.2 percent, to 4,717.02.

The S&P 500 rose more than 2.5 percent for the week, its third straight week of gains.

Brazil’s stock market rose to a seven-month high after police detained former President Luiz Inacio Lula da Silva for questioning in an investigation of a bribery and money laundering scheme.

The Bovespa was up more than 4 percent following a 5 percent gain on Thursday after news of Lula’s questioning brought the investigation closer to President Dilma Rousseff, who is fighting off impeachment. It was the largest two-day gain the index has posted since January 2009.

For months, Brazilian assets have rallied when it appears that prospects have increased of a change in government. Rousseff’s increased state intervention in the economy has long been unpopular with business.

Yields of U.S. benchmark Treasuries rose to their highest levels in a month, led by longer-dated securities. The benchmark 10-year Treasury note fell 13/32 in price to yield 1.88 percent.

MSCI’s global gauge of stocks was up 0.7 percent. Asian shares closed with their best week in five months and European stock markets ended with a third week of gains.

Oil prices touched two-month highs, gaining 10 percent this week. Benchmark Brent crude futures rose 4.6 percent to $38.78, and U.S. crude rose 4.2 percent to $36.03.

Iron ore and copper both hit four-month highs.

The dollar fell 0.25 percent against a basket of major currencies, and the euro rose above $1.10 for the first time since Feb. 26.

(Reporting by Dion Rabouin; Addtional reporting by Anirban Nag; Editing by Bernadette Baum, Nick Zieminski and Leslie Adler)

U.S. trade deficit widens as exports hit five-and-a-half-year low

WASHINGTON (Reuters) – The U.S. trade deficit widened more than expected in January as a strong dollar and weak global demand helped to push exports to a more than five-and-a-half-year low, suggesting trade will continue to weigh on economic growth in the first quarter.

The Commerce Department said on Friday the trade gap increased 2.2 percent to $45.7 billion. December’s trade deficit was revised up to $44.7 billion from the previously reported $43.4 billion. Exports have declined for four straight months.

Economists polled by Reuters had forecast the trade deficit widening to $44.0 billion in January. When adjusted for inflation, the deficit increased to $61.97 billion from $60.09 billion in December.

Trade subtracted a quarter of a percentage point from gross domestic product in the fourth quarter, helping to hold down growth to a tepid 1.0 percent annual rate.

In January, exports of goods fell 3.3 percent to $116.9 billion, the lowest level since November 2010. Overall exports of goods and services dropped 2.1 percent to their lowest level since June 2011.

There were declines in food exports, which were the weakest since September 2010. Industrial supplies and materials exports fell to their lowest level since March 2010. Petroleum exports also fell, touching their lowest level since September 2010.

Exports of non-petroleum products were the weakest since February 2011. Exports to the United States’ main trading partners fell broadly in January.

Imports of goods fell 1.6 percent to $180.6 billion, the lowest level since February 2011. Import growth is being constrained by ongoing efforts by businesses to reduce a stockpile of unsold merchandise.

Lower oil prices as well as increased domestic energy production are also helping to curb the import bill. There were declines in imports of industrial supplies and materials.

Automobile imports were, however, the highest on record.

The politically sensitive U.S.-China trade deficit rose 3.7 percent to $28.9 billion in January.

(Reporting by Lucia Mutikani; Editing by Paul Simao)