Dow and S&P Extend Gains, Oil Advances

Nichole Harper
23 Dec, 2014
New York City

Market indexes extended gains in the week, in the month and in the year after the U.S. revised third quarter economic growth rate to 5%. Tech stocks led the charge and retailers gained on the expectations of stronger-than-expected holiday sales.

[R]2:40 PM New York – Market indexes extended gains in the week, in the month and in the year after the U.S. revised third quarter economic growth rate to 5%. Tech stocks led the charge and retailers gained on the expectations of stronger-than-expected holiday sales.[/R]

Stocks in New York extended market gains after energy and technology sectors advanced and debate raged on the future direction of the price of oil.

Stocks were also powered by the better-than-expected third quarter economic growth on rising consumer spending after the fall in

Investors weighed the global demand-supply balance with the rising supply of oil in the U.S. and refining capacity.

In addition, traders looked at the flat production from the OPEC over the last ten years as non-OPEC suppliers ramp up production.

Investors are focused on the marginal cost of production from shale fields and more than eighty percent of production is profitable even with $20 a barrel.

New shale producers however do face higher cost of capital and marginal cost pf production is between $50 and $66 a barrel.

On Wall Street trading, Tollbooth Strategy Index gained 0.6% or 66.07 to 10,152.52.

S&P 500 index increased 4.14 or 0.2% to 2,082.69 and the Nasdaq Composite Index fell 9.59 or 0.2% to 4,771.72.

The Dow Jones Industrial Average surpassed 18,000 for the first time after technology stocks led the charge.

The Dow, not as widely followed as in the past, dropped to an eight-month low on October 16 and rallied 1,882 points, or 12% from the low.

The Department of Commerce reported durable goods orders in November fell 0.7% to $242.3 billion and orders excluding transportation decreased 0.4% and defense slid 0.1%.

In a separate report, the department revised higher its estimate of economic growth to 5% in the third-quarter from the previous estimate of 3.9%. The third estimate of the economic growth is the final estimate.

November personal income rose 0.4% and disposable personal income increased 0.3%. Personal consumption expenditure jumped 0.6% in the month, the government report showed.

The Commerce Department added seasonally adjusted new home sales in November fell 1.6% to 438,000 from the revised October rate of 445,000 and slipped 1.6% from a year ago month.

The price of oil future for the immediate month delivery increased 3% to $56.34 a barrel and gold edged up 0.2% to $1,196.70.

U.S. Movers

Cargill, Inc, the private agro-food and poultry products trader said it is not interested in acquiring Netherlands-based animal-feed supplier Nutreco NV with an offer of about $3.79 billion or €3.1 billion.

Walgreen Company ((WAG)), the retail drugstore chain reported sales in the first-quarter ending in November jumped 6.7% to $19.6 billion form a year ago period.

Total comparable store sales in the quarter climbed 5.7% and front-end comparable store sales increased 1.5%. While customer traffic in comparable stores dropped 2.7% but basket size advanced 4.2%.

Net earnings in the quarter soared 16.4% to $809 million or 85 cents a diluted share compared to $695 million or 72 cents from a same quarter last year.

European Markets

In London trading, FTSE 100 index rose 0.3% or 23.19 to 6,599.93 and in Frankfurt the DAX index gained 0.5% or 44.46 to 9,910.22.

In Paris, CAC 40 index jumped 1.1% or 47.36 to 4,301.79.

In the European corporate news, BBVA agreed to sell 29.7% stake in a Hong Kong-based Citic Intl for about €845 million. Nutreco declined after the U.S.-based Cargill rejected acquisition plan.

Oerlikon agreed to sell its Advanced Technologies unit to Evatec. Thorntons tumbled on weak outlook.

Banco Bilbao Vizcaya Argentaria SA, the Spain-based bank agreed to sell 29.7% stake in a Hong Kong-based financial service provider Citic International Financial Holdings Ltd. to its parent company China Citic Bank Corporation for about €845 million or $1.03 billion.

Nutreco N.V, the U.S.-based private agro-food and poultry products trader Cargill Inc said it is not interested in acquiring Netherlands-based animal-feed supplier.

Oc Oerlikon Corporation Pfaeffikon AG, the Switzerland-based textile equipment maker agreed to sell its Advanced Technologies unit to Evatec AG for undisclosed financial terms.

The transaction is expected to close in first-quarter of 2015.

Asian Markets.

Markets in Japan were closed and in Shanghai the reference index plunged 3% and in Australia declined 1.1%.

Stocks in Mumbai traded lower and trading volume was below and investors focused on the recent volatility in the currency markets.

Rupee extended losses and dropped to a new low of 63.45 against one dollar as the stronger than seasonal demand for the foreign currency.

In Mumbai trading, Sensex Index dropped 195.33 or 0.7% to close at 27,506.46. The CNX Nifty fell 57 or 0.7% to 8,267.

Alstom T&D India Limited, the power generation equipment maker secured a contract worth Rs 180 crore or €23 million from NTPC.

Cipla Limited, the largest drug maker’s subsidiary won an order for about Rs 1,100 crore or $173 million in South Africa.