Wall Street closed mixed on Monday as the positive impact of a surge in oil prices was partially negated by news that China may end economic stimulus and opt for structural reforms. Moreover, investors preferred to remain largely on the sidelines at the start of the busiest week of the first-quarter earnings season. Both the S&P 500 and Nasdaq Composite ended in positive territory while the Dow finished in negative territory.
The Dow Jones Industrial Average (DJI) closed at 26,511.05, declining 0.2%. However, the S&P 500 Index (INX) gained 0.1% to close at 2,907.97. The Nasdaq Composite Index (IXIC) closed at 8,015.27 increasing 0.2%. A total of 5.79 billion shares were traded on Monday, lower than the last 20-session average of 6.65 billion shares. Decliners outnumbered advancers on the NYSE by 1.41-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.33-to-1 ratio. The CBOE VIX increased 2.7% to close at 12.42.
How Did the Benchmarks Perform?
The Dow ended in negative territory with 18 stocks of the 30-stock blue-chip index finishing in the red while twelve ended in the green. The Boeing Company BA declined 1.3% after safety concerns were raised for the company’s latest flagship 787 Dreamliner. The Boeing has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 closed in the green for the second successive days. The Energy Select Sector SPDR (XLE) surged 2.1% while Real EstateSelect Sector SPDR (XLRE) lost 1.1%. Notably, five out of eleven sectors of the benchmark index closed in the green while six finished in the red. The Nasdaq Composite finished in the green due to strong performance by large-cap tech stocks. This was tech-heavy index’s highest close since Oct 3.
Crude Oil Prices Jump to Record High
On Apr 22, the U.S. government said that the State Department will withdraw the waivers granted to eight countries to import crude oil or condensate from Iran effective May 2. Notably, on November 2018, the Trump administration imposed sanctions on Iran’s oil import after President Donald Trump pulled out of the Nuclear Agreement inked in 2015 between Iran and United States.
However, waivers were granted for the last six months to eight countries – India. China, Japan, South Korea, Turkey, Italy, Greece and Taiwan –- to import 1 million barrel of crude oil per day from Iran. India and China are the two largest importers of Iranian crude.
Following the news, the U.S. benchmark West Texas Intermediate (WTI) crude futures surged 2.7% or $1.7 to close at $65.70. Likewise, the global benchmark, Brent Crude futures soared 2.9% or $2.07 to end at $74.04. Both WTI and Brent crudes witnessed their highest close since Oct 31, 2018.
Consequently, shares of oil behemoths such as Exxon Mobil Corp. XOM and Chevron Corp. CVX gained 2.2% and 1.7%, respectively.
China Likely to End Economic Stimulus
On Apr 22, the South China Morning Post reported that the government of China has decided to end economic stimulus and will focus on structural reforms in order to steady the economy. The 25-member Chinese politburo expressed confidence in the country’s performance in the first quarter.
Notably,China’s GDP increased at 6.4% compared to the year-ago period, defying expectations that it would decline further.Industrial production increased 8.5% from the year-ago quarter in March,marking the sharpest pace of growth since July 2014. Additionally, retail sales increased 8.7% year on year in March. Several economists have credited economic stimulus for the turnaround of the Chinese economy.
The National Association of Realtors reported that existing home sales declined 4.9% to a seasonally adjusted annual rate of 5.21 million in March, missing the consensus estimate of 5.32 million. Year over year, existing home sales declined 5.4%. February’s figure was revised downward to 5.48 million from 5.51 million reported earlier.
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