Tuesday, December 8, 2015

Lower markets, led by more selling in oil

Dow fell 88 (well above the early AM lows), decliners over advancers 2-1 & NAZ inched up 1.  The MLP index rebounded 6+ to the 358s & the REIT index was fractionally lower to the 319s.  Junk bond funds eased lower & Treasuries were flattish.  Oil continued weak (see below) & gold did little.

AMJ (Alerian MLP Index tracking fund)

CLF16.NYM...Crude Oil Jan 16...37.21 Down ...0.44  (1.2%)

GCZ15.CMX...Gold Dec 15...1,074.50 Down ....1.90  (0.2%)

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The number of job openings in the US fell by 151K to 5.38M in Oct from a revised 5.53M in the prior month, according to the Labor Dept.  Hiring picked up.

Job Openings in U.S. Fell by 151,000 in October to 5.38 Million

Euro-area growth in Q3 was bolstered by private consumption & gov spending as exports suffered from a slowdown in global trade.  GDP in the 19-nation bloc rose 0.3% after expanding 0.4% in Q2, the EU statistics office said.  The data come less than a week after the ECB cut one of its main interest rates to a record low & expanded its asset-purchase program to at least €1.5T ($1.6T) to shore up the region’s muted economic recovery & bring inflation closer toward 2%.  While domestic spending is benefiting from lower oil prices, exports are damped by an economic slowdown in emerging markets.  Gov spending climbed 0.6% from 0.3% in Q2, & household consumption accelerated to 0.4% from 0.3%.  Gross fixed capital formation was unchanged from Q2, when it rose a revised 0.1%.  Exports were up 0.2% & imports increased 0.9%.  From a year ago, the 19-nation economy expanded 1.6%, according to Eurostat.  The ECB presented fresh economic projections last week that were largely unchanged from Sep, even as ECB pres Mario Draghi pointed to downside risks emanating from “heightened uncertainties regarding developments in the global economy as well as to broader geopolitical risks.”  The central bank kept its growth forecast for next year at 1.7%, & revised a 2017 projection to 1.9% from 1.8%.  The inflation outlook for 2016 was cut to 1% from 1.1% & lowered to 1.6% from 1.7% for the following year.

Euro-Area Economy Grows 0.3% in Third Quarter on Consumption

Oil prices continued sliding, hitting fresh 7-year lows, with Brent, the global benchmark, in danger of falling below $40 a barrel.  It declined 1.2% to $40.26 after falling 6% on yesterday, bringing energy company shares down with them.  Fundamental concerns regarding oversupply still blight the market, & analysts predicted Brent breaking through the $40 mark could have a deep psychological impact on the market.  Brent's potential move below $40 is making some traders reluctant to take any risks in this market until next week's decision from the Fed on interest rates.  Frid's decision by OPEC to maintain high production will test the ability of non-OPEC producers to handle continued price pressure.  The Dept of Energy predicts that US shale oil production will drop 116K barrels in Jan.

Oil Prices Reverse Course Resuming Fall

There was bargaining hunting after the Dow plunged at the opening, but stocks are still under a lot of selling pressure.  Oil shows no sign of rebounding & the expected rate increase next week by the Fed should keep stock markets on defense.  Uneven economic data is not helping this scenario.

Dow Jones Industrials

stock chart


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