S&P 500, FTSE 100 Jump on Oil Bounce and Ahead of Fed Decision

Nichole Harper
15 Dec, 2015
New York City

Stocks rebounded on Wall Street and the S&P 500 and Tollbooth Strategy indexes jumped after crude oil rebounded from its near 4-year low. European markets surged more than 1.5% and the high yield bond market rout spread to Europe.

[R]11:30 AM New York City, New York – Stocks rebounded on Wall Street and the S&P 500 and Tollbooth Strategy indexes jumped after crude oil rebounded from its near 4-year low. European markets surged more than 1.5% and the high yield bond market rout spread to Europe.[/R]

Market indexes on Wall Street traded higher after crude oil rebounded from its near four-year low and credit market losses worsened in the high yield segment.

High yield bond market has been under pressure as the Fed meeting gets underway tomorrow and the recent plunge in oil market also affected bonds worth $2 trillion issued to shale oil companies since 2010.

High yield bonds issued to shale oil explorer has been on the sharp decline in the liast two weeks with the oil price decline of more than 44% in 2015 on top of similar losses in in 2014.

The index of consumer prices in November was unchanged from October. For the year all item index before seasonal adjustment rose 0.5%.

The food index fell 0.1% and energy index dropped 1.3% while gasoline index slumped 2.4% from 0.4% increase in October, the Department of Labor said.

On Wall Street, Tollbooth Strategy Index increased 51.12 or 0.5% to 10,863.92.

S&P 500 index jumped 22.21 or 1.1% to 2,044.42 and the Nasdaq Composite Index increased 55.09 or 1.1% to 5,007.32.

Crude oil in New York gained to $36.86 a barrel and gold rose $1.13 to $1,060.99 an ounce.

U.S. Movers

3M Co ((MMM)) slumped 4.4% or $6.93 to $150.77 after the diversified technology company lowered earnings per share forecast for the year of about $7.55 from earlier estimated range of $7.60 to $7.65.

In August, the company forecasted earnings per share for the year between $7.73 and $7.93.

Inland Real Estate Corporation ((IRC)) soared 6.1% or 61 cents to $10.55 after the real estate developer agreed to be acquired to be taken private by real estate funds managed by DRA Advisors LLC for $10.60 per share in cash or about $2.3 billion including debt.

The transaction is expected to close in the first-half of 2016.

Valeant Pharmaceuticals Intl Inc ((VRX)) surged 13.7% or $12.85 to $106.79 after the Canada-based pharmaceutical and medical devices maker signed 20-year agreement with Walgreens Boots Alliance Inc to offer discounts on its branded drugs.

European Markets

European stocks staged a comeback on Tuesday, ahead of the Federal Reserve meeting in the U.S., widely anticipated to raise interest rates for the first time in nine years.

Weakness in bond market in New York for the third spread to the stock and bond markets in the euro zone.

Nearly $2 trillion worth of bonds are issued to oil companies since 2010 and many of these shale gas producers are struggling with the recent plunge in oil prices.

A slight rebound in oil prices from five-year low also supported the gains in Europe.

While a U.S. rate hike to 0.25% to 0.50% indicates a stronger economy, there are ongoing concerns that higher rates would slow down the growth and would affect the U.S. corporate debt market and the euro zone government bonds.

Crude oil price in London, which have been falling for three weeks due to oversupply worries, rose on bargain-hunting. U.S. crude-oil prices gained 1.3% to $37 a barrel.

In Europe, preliminary employment data indicated growth of 0.3% in the euro zone and 0.4% in EU28 for the third quarter from the previous quarter, according to Eurostat.

In the U.K., annual inflation consumer prices increased 0.1% in November, compared to a decrease of 0.1% in October, according to the Office for National Statistics.

Producer prices in the U.K. declined 1.5% in November, compared to a decline of 1.4% in October.

In London trading, FTSE 100 index jumped 100.33 or 1.7% to 5,974.49 and in Frankfurt the DAX index soared 225.86 or 2.2% to 10,365.37.

In Paris, CAC 40 index advanced 90.55 or 2% to 4,562.93.

Sanofi SA soared 4.6% to €78.13 after the France-based healthcare products maker and the Germany-based Boehringer Ingelheim GmbH are in exclusive talks to swap assets worth €18.1billion or £13.2 billion.

Boehringer agree to pay €4.7 billion or $5.16 billion to Sanofi as part of the deal and Sanofi’s animal-health business with enterprise value of €11.4 billion and Boehringer’s consumer-health-care business valued of €6.7 billion.

Sanofi said. Boehringer’s consumer-health-care business in China won’t be included in the transaction.

Schneider Electric SE fell 0.3% to €52.25 France-based electricity distribution group confirmed that it had terminated the discussions to acquire British engineering software provider AVEVA Group Plc.

Earlier Schneider offered to invest £550 million or $858 million in Aviva’s software business and acquire 53.5% stake in the company that valued £1.3 billion.

AVEVA Group Plc stock tumbled 34.2% to 1,425 pence.

UBM Plc jumped 3.1% to 487.84 pence after the marketing and communication services provider agreed to divest its press release distribution business PR Newswire for $841 million to Cision, owned by GTCR Canyon Holdings L.P. in cash and stock.

The transaction is expected close by the end of first-quarter 2016.

Asian Markets

The Nikkei 225 extended its losses ahead of the U.S. Federal Reserve rate decision. J. Front Retailing said sales in November dropped 1.8%. Yahoo Japan agreed to acquire Ikyu Corp. for $830 million.

Shares in Tokyo declined on Tuesday as investors remained cautious ahead of the interest rate decision of the U.S. Federal Reserve tomorrow.

News from retailers announcing sluggish November sales additionally dampened investor sentiment.

Although the market is anticipating the first U.S. interest rate hike since 2008, the outcome and the extent of the hike is unclear.

J. Front Retailing said sales in November dropped 1.8% after wholesale business segment tumbled 11.9% and Takashimaya said sales in November slipped 1%.

SoftBank said Yahoo agreed to acquire Ikyu Corp. for as much as 100.2 billion yen or $830 million.

The Nikkei 225 Stock Average declined 317.56 or 1.7% to 18,565.90 and the broader Topix index slumped 25.33 or 1.7% to 1,502.55.

The yen strengthened against the dollar to 120.97.

Stocks in Mumbai rebounded for the second day in a row from the six-year low after investors returned in search of bargains and focused on consumer and infrastructure stocks.

Commodities and resource linked stocks remained under pressure after crude oil extended losses in the year to 44%.

The largest consumer food products maker, Hindustan Unilever jumped to a 3-month high and the state controlled and the largest energy explorer edged from its 2009-low.

Rupee strengthened 15 paisa to ₹66.93 against one U.S. dollar.

The Sensex Index increased 170.09 or 0.7% to close at 25,320.44. The CNX Nifty rose 50.85 or 0.7% to 7,700.90.

The reference index Sensex has fallen 8% in the year so far and the S&P 500 index in New York has lost 1.8% and the Tollbooth Strategy index has gained 7.5% in the period.

Bharti Airtel signed a partnership agreement with Bahrain-based telecom services operator Batelco with operations in 20 countries across Asia and Africa.