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Following two trading days of losses after the U.K. referendum results, benchmarks closed in the green on Tuesday after investors recouped some of their losses. Investors grew optimistic yesterday and sought assets mostly from beaten down sectors. All the three key U.S. indexes rallied northward and increased more than 1.5%. Moreover, the CBOE Volatility Index (VIX) posted its biggest one-day fall since August 2011.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) increased 1.6%, or 269.48 points to close at 17,409.72. The S&P 500 rose 1.8% to close at 2,036.09. The tech-laden Nasdaq Composite Index closed at 4,691.87, gaining 2.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 21.4% to settle at 21.38. A total of around 8.2 billion shares were traded on Tuesday, higher than the last 20-session average of 7.5 billion shares. Advancers significantly outpaced declining stocks on the NYSE. For 84% stocks that advanced, 15% declined.
Following two-days of declines, domestic markets rebounded yesterday after sentiment turned positive. Investors acquired shares from beaten-down sectors following a huge sell-off. Meanwhile, the dollar fell against the pound. The pound advanced 0.9% against the greenback to $1.3343. After rising 2.7% in last two sessions, the U.S. Dollar index (DXY) fell 0.4% yesterday.
Oil prices recovered on a weaker dollar, strikes in Norway and production disruptions in Venezuela. Recent strikes of oil workers in Norway have negatively impacted its crude output. Also, refiners and oil producers in Venezuela struggled to maintain production following equipment shortages and power interruptions. Both WTI and Brent crude rose 3.2% and 2.9% to $47.85 a barrel and $48.58 per barrel, respectively.
Rise in oil prices led the Energy Select Sector SPDR (XLE) to increase 2.8%, which was the biggest advancer among the S&P 500 sectors. Key energy stocks including, Southwestern Energy Company (SWN), Marathon Petroleum Corporation ( MPC), Marathon Oil Corporation (MRO), EOG Resources, Inc. (EOG) and Halliburton Company (HAL) rose 11.8%, 8.4%, 8.2%, 4% and 3.3%, respectively. Dow components Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX) increased 2.3% and 1.3%, respectively.
Additionally, the Financials Select Sector SPDR (XLF) rose 2.6% and was the second best performer among the S&P 500 sectors. Top holdings from this sector such as Bank of America Corporation (BAC), Citigroup Inc. ( C) and Wells Fargo & Company (WFC) advanced 4.3%, 5.1% and 2.4%, respectively. Dow components JPMorgan Chase & Co (JPM) and Goldman Sachs Group, Inc. (GS) increased 3.3% and 2.1%, respectively. The Financial Services Select Sector SPDR (XLFS) also advanced 2.2%.
In economic news, the “third” estimate by the Bureau of Economic Analysis showed that first quarter output of goods and services increased at an annual rate of 1.1%, higher than the consensus estimate of 1% increase. Further, first-quarter GDP data was revised upward from the previously estimated 0.8% rise.
The S&P/Case-Shiller Home Price Index revealed that the 20-City composite index, the leading measure of U.S. home prices, rose 1.1% in April, higher than the 0.9% rise in March. The index also increased 5.4% year-over-year in April, in line with March’s gain.
Also, the S&P/Case-Shiller data revealed that the 10-City composite index, another important measure of U.S. home prices, rose 1% in April, more than the 0.9% rise in March. The index rose 4.7% year-on-year in April, slightly lower than March’s increase of 4.8%.
Further, the Conference Board reported that Consumer Confidence Index advanced to 98 in June from 92.4 in May. The reading also exceeded the consensus estimate of 93.1.
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MARATHON OIL CP (MRO): Free Stock Analysis Report
EOG RES INC (EOG): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
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