Closing Market Summary: Indices Modestly Higher as Oil Rallies to 2016 HighThe stock market ended the Wednesday affair on a slightly higher note as the major averages rallied in lockstep with crude oil. Other factors impacting today's gain included a slew of quarterly earnings reports and key sector leadership from financials (+0.9%), health care (+0.6%), and technology (+0.2%). The Dow Jones Industrial Average (+0.2%) finished in-line with the Nasdaq Composite (+0.2%) and ahead of the S&P 500 (+0.1%).
Today's session began on a choppy note as oil ticked lower following the American Petroleum Institute's latest stockpile data. Additionally, investor sentiment was briefly dampened as participants ruminated over commentary out of China, which cast some doubts on future easing measures from the People's Bank of China.
The major averages were able to shake the early weakness after the Department of Energy's weekly inventory report showed a smaller than expected crude oil build (2.08 million barrels; consensus 2.40 million barrels). Furthermore, speculation grew throughout the day that OPEC and non-OPEC members might be planning another meeting to vote on a proposed supply cut agreement. However, Russian Energy minister Alexander Novak denied plans for a May meeting. Nevertheless, WTI crude ended its day at a new 2016 closing high ($44.15/bbl; +4.3%).
As a result of the rally in crude oil, the benchmark index managed to break out above yesterday's high (2104.05) before notching a new intraday high for 2016 (2111.05). However, the broader market pulled back in the final hour of trade as investors looked ahead to tomorrow's policy statement from the European Central Bank and subsequent remarks from ECB President Draghi. Five sectors ended the day above their flat lines as financials (+0.9%), energy (0.8%), health care (+0.6%), and technology (+0.2%) topped the leaderboard.
In the economically-sensitive financial sector (+0.9%), consumer finance names outperformed after Discover Financial Services (DFS 56.84, +4.29) reported above-consensus results for the first quarter. Elsewhere, investment brokerages displayed relative strength as Morgan Stanley (MS 27.41, +0.95) gained 3.6%. The broader sector has extended its April gain to 4.5%, but remains down 1.3% on a year to date basis.
The energy space (+0.8%) helped lead the final hour pullback, trimming a 1.6% gain. Independent oil and gas names pared larger upticks as ConocoPhillips (COP47.08, +0.02) and Anadarko Petroleum (APC 50.66, +0.13) surrendered respective gains of 1.3% and 2.2%. The two names ended their day narrowly above their flat lines. For its part, the energy sector has gained 7.2% in April.
Medical equipment names outperformed in the health care space (+0.6%) after St. Jude Medical (STJ 60.94, +2.34) topped earnings estimates in the first quarter. The company also increased its full-year earnings guidance above consensus. Biotechnology underperformed today after Regeneron Pharmaceuticals (REGN 399.75, -14.03) was downgraded from "Outperform" to "Market Perform" at Wells Fargo.
In the technology space (+0.2%), Yahoo! (YHOO 37.84, +1.51) gained 4.2% after beating bottom-line estimates in the first quarter, but lowering its second quarter revenue estimates below consensus. The company also voiced its commitment to pursuing strategic options. Elsewhere, Intel (INTC 32.00, +0.40) recovered from early weakness as investors looked to above-consensus bottom-line results in the first quarter and restructuring plans.
The Treasury complex ended its day off its session low as the yield on the 10-yr note rose six basis point to 1.85%.
The U.S. Dollar Index (94.55, +0.57) finished its day at its high as the yen and euro lost ground to the greenback. The euro/dollar pair finished at 1.1298 (-0.5%) while the dollar gained 0.6% against the yen (109.80).
Today's participation was above the recent average as more than 961 million shares changed hands on the NYSE floor.
Today's economic data was limited to the MBA Mortgage Index and March Existing Home Sales:
- The weekly MBA Mortgage Index showed a seasonally adjusted increase of 1.3%.
- Existing home sales in March increased 5.1% month-over-month to a seasonally adjusted annual rate of 5.33 million units (consensus 5.30 million).
- February sales were revised slightly lower to 5.07 million (from 5.08 million).
- The March increase featured an uptick in sales in all regions. The Northeast led the way with an 11.1% gain, followed by the Midwest (+9.8%), the South (+2.7%), and the West (+1.8%).
- While the West enjoyed a month-over-month increase, it was the only region that saw existing home sales decline on a year-over-year basis (-2.5%).
- The median home price increased 5.7% year-over-year to $222,700, which is the 49th consecutive month of year-over-year gains.
- Those rising prices, along with limited inventory at the low end, have impeded buying opportunities for first-time buyers, whose share of existing home purchases in March held steady at 30% (the average for all of 2015).
- It was also said in today's release that limited inventory and affordability pressures were also leading to softer sales at the very high end of the market.
- At the March sales pace, the inventory of homes for sale stood at just 4.5 months, up from 4.4 months in February but still well below the 6.0-month supply typically seen during normal periods of buying and selling.
- Another sign of the inventory constraint, and the competition to buy an existing home, is that properties listed for sale typically stayed on the market for 47 days in March, matching the lowest time on the market since August 2015. The typical time on the market stood at 59 days in February and 52 days in March 2015.
- Distressed sales fell to 8% in March from 10% last month and the same period a year ago.
Tomorrow's economic data will include the the 8:30 ET release of weekly initial claims (consensus 263k) and the Philadelphia Fed Survey for April (consensus 9.9). Meanwhile, the FHFA Housing Price Index for February and March Leading Indicators (consensus 0.4%) will cross the wires at 9:00 ET and 10:00 ET, respectively.
- Dow Jones +3.9% YTD
- S&P 500 +2.9% YTD
- Russell 2000 +0.6% YTD
- Nasdaq Composite -1.2% YTD