U.S. Indexes Advanced Second Day, Crude Oil Extended Recent Gains

Barry Adams
21 Dec, 2022
New York City

Benchmark indexes jumped more than one percent and closed higher for the second day in a row. 

Investors stepped up to add more exposure to retail stocks after FedEx and Nike reported earnings ahead of market expectations. 

Energy stocks were also in favor after two separate reports showed larger-than-expected withdrawal of crude oil inventories. 

Home builders closed higher despite the decline in existing home sales in November but median home price increased. 

The S&P 500 index increased 1.5% to 3,878.44 and the Nasdaq Composite index advanced 1.5% to 10,709.37. 

The yield on 2-year Treasury notes eased to 4.22%, 10-year Treasury notes fell to 3.67% and 30-year Treasury bonds dropped to 3.78%. 

 

Crude Oil Jumps After Inventories Reports 

Crude oil futures jumped 2.8% to $78.33 a barrel after the U.S. inventories declined 3.1 million barrels last week from the 7.8 million barrels increase in the previous week, the American Petroleum Institute reported Tuesday.

U.S. crude oil inventories declined 5.894 million in the week ending December 16, the Energy Information Administration indicated in its weekly report released Wednesday. 

Natural gas futures rose 14 cents to $5.47 a thermal unit. 

 

Home Sales Declined 7.7% In November 

Existing home sales annual pace in November declined 7.7% to 4.09 million units from October, the National Association of Realtors reported Wednesday. 

Sales plunged 35.4% from a year ago and weakest since November 2010.

 

Mortgage Rate Eased Last Week 

Mortgage rates for standard loans with 20% down payment decreased 8 basis points to 6.34% in the week ended December 16, the Mortgage Bankers Association report showed Wednesday.

 

U.S. Stock Movers 

FedEx increased 4.8% to $172.12 after the parcel delivery company reported a decline in earnings but results were ahead of expectations. 

FedEx revenue in the fiscal second quarter declined 3% to $22.8 billion and net income dropped to $788 million from $1.04 billion and diluted earnings per share fell to $3.07 from $3.88 a year ago.

Nike Inc soared 14.01% to $117.73 after the footwear maker and retailer reported better-than-expected quarterly results. 

Revenue in the fiscal second quarter increased 17% to $13.3 billion and gross margin declined 300 basis points to 42.9%. 

Net income in the quarter was flat at $1.3 billion and diluted earnings per share increased to 85 cents from 84 cents a year ago. 

Inventories in the quarter increased 43% to $9.3 billion from a year ago but declined from $9.7 billion in the previous quarter. 

Excess merchandise in the prior quarter led to above-normal discounting, negatively impacting gross margin. 

Direct sales also increased 16% to $5.4 billion and digital sales rose 25% 

 

Holiday Sales Expectations Lift Europe Indexes 

Stock markets in Europe traded higher and major indexes rebounded from six-week lows on holiday sales optimism. 

Consumer sector stocks were in focus and bond yields were stable in trading on Wednesday. 

Crude oil prices advanced after two separate reports showed a larger than expected decline in the U.S. inventories but natural gas prices extended losses after supply worries eased. 

The DAX index increased 1.5% to 14,097.82, the CAC-40 index surged 2.5% to 6,580.24 and the FTSE 100 index jumped 1.7% to 7,497.32. 

The yield on 10-year German Bunds inched up to 2.3%, French bonds edged higher to 2.84%, the UK Gilts edged down to 3.47% and Italian bonds inched lower to 4.42%. 

 

Crude Oil Advanced After U.S. Inventories Declined 

Dutch front-month natural gas futures extended losses and dropped to one-month low and below