Closing Market Summary: Stocks Soar While Crude Oil Remains Pressured
The stock market ended the Thursday session on its high with the S&P 500 (+2.4%) extending its two-day advance to 88 points.
The key indices started the Thursday session on a sharply higher note after equity futures received an early morning boost, which took place after the Swiss National Bank imposed negative deposit rates (-0.25%). The central bank said the move is aimed at lowering the three-month LIBOR below zero and European investors viewed the announcement as a prelude to a sovereign QE program from the European Central Bank.
European equities, U.S. futures, and commodities rallied following the news, but crude oil fell victim to renewed selling interest after climbing above the $58.50/bbl level in the early morning. The energy component ended near its worst level of the day, down 4.0% at $54.19/bbl.
For its part, the energy sector (+2.1%) displayed relative strength at the start, but was pressured from its high by the intraday weakness in crude. Marathon Oil (MRO 27.56, +0.89) finished ahead of the sector, adding 3.3%, after lowering its 2015 capital, investment, and exploration budget by about 20.0% from this year's levels due to the recent plunge in the price of crude. The energy sector was the only group that could not climb above its morning high.
Outside of energy, consumer discretionary (+1.6%) and materials (+2.3%) were the only other cyclical groups that could not finish ahead of the broader market. A handful of quick-service restaurant names contributed to the underperformance of discretionary shares after Dunkin Brands (DNKN 43.05, -3.17) issued below-consensus guidance for fiscal year 2015. Shares of DNKN tumbled 6.9% while peers Krispy Kreme (KKD 18.98, -0.75) and Starbucks (SBUX 80.03, -0.41) lost 3.8% and 0.5%, respectively.
Elsewhere among cyclical sectors, technology (+3.0%) did some heavy lifting with a sizable assist from Oracle (ORCL 45.35, +4.19). The stock surged 10.2% in reaction to better than expected results while other large cap names like Apple (AAPL 112.65, +3.24), Microsoft (MSFT 47.52, +1.78), and IBM (IBM 157.68, +5.75) rallied between 3.0% and 3.9%.
Over on the countercyclical side, consumer staples (+2.0%), telecom services (+1.8%), and utilities (+2.0%) lagged while the health care sector (+2.8%) ended ahead of the broader market with help from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 313.97, +10.59) spiked 3.5%.
Treasuries ended the day just above their lows with the 10-yr yield higher by seven basis points at 2.21%.
Participation was well ahead of average with more than 950 million shares changing hands at the NYSE floor.
Economic data included Initial Claims, Leading Indicators, and the Philadelphia Fed Survey:
* Initial jobless claims fell to 289,000 from a revised rate of 295,000 (from 294,000) while the consensus expected a decline to 292,000
* Continuing claims fell to 2.373 million from 2.520 million
* The Philadelphia Fed's Business Outlook fell to 24.5 in December from 40.8 in November while the consensus expected a decline to 26.0
* While the index deteriorated across the board, it was coming off a high point that was simply not sustainable
* The Conference Board's Leading Economic Index increased 0.6% for a second consecutive month in November after a downward revision (from 0.9%) to the October data
* The Consensus expected an increase of 0.5%
Tomorrow's session will be free of economic data.
* Nasdaq Composite +13.7% YTD * S&P 500 +11.5% YTD * Dow Jones Industrial Average +7.3% YTD * Russell 2000 +2.5% YTD