Wall Street Stocks Rebound, U.S. Crude Oil Production Surges to a Record High, Angola Leaves OPEC+

Barry Adams
21 Dec, 2023
New York City

Stocks advanced, benchmark indexes rebounded from sharp losses in the previous session, and crude oil prices were in focus after Angola said it plans to leave the OPEC+.

Benchmark indexes rebounded more than 0.4% in Thursday's trading after weekly jobless claims held steady and third-quarter GDP growth was revised slightly lower.

The S&P 500 index and the Nasdaq Composite fell 1.5% in Wednesday's trading as investors reacted negatively to FedEx's business outlook.

Moreover, investors also booked profit ahead of the year's end after the S&P 500 index gained more than 23% and the Nasdaq Composite advanced more than 42% in the year so far.

Investors reviewed the release of the third quarter GDP growth report and the weekly jobless claim update.

 

Weekly Jobless Claims Hold Steady

Initial jobless claims increased by 2,000 to 205,000 in the week ending on December 16, the U.S. Bureau of Labor Statistics reported Thursday.

Moreover, continuing claims decreased by 1,000 to 1.865 million in the previous week ending on December 9.

Initial claims are near a two-month low of 203,000, indicating tight labor market conditions, and the four-week moving average decreased by 1,500 to 212,000.

 

Third Quarter GDP Growth Revised Lower to 4.9%

Real gross domestic product increased at an annual rate of 4.9% in the third quarter, according to the third estimate from the Bureau of Economic Analysis.

The economic growth estimate was downwardly revised from 5.2%, but ahead of the 2.1% increase in the second quarter.

The U.S. economy expanded at the fastest pace since the fourth quarter of 2021, and the latest revision was driven by the downward revision to consumer spending and imports.

Consumer spending rose at a slower pace of 3.1% from the previous estimate of 3.6%, and the increase in imports was revised lower to 4.2% from 5.2% estimated in the second quarter.

However, residential investment growth was revised higher to 6.7% from 6.2%, and government spending increase was revised higher to 5.8% from 5.5%.

 

U.S. Indexes and Yields

The S&P 500 index gained 0.8% to 4,718.03, and the Nasdaq Composite increased 0.6% to 14,863.01.

The yield on 2-year Treasury notes increased to 4.35%, 10-year Treasury notes inched lower to 3.86%, and 30-year Treasury bonds eased to 4.0%.

Crude oil prices dropped below $74 a barrel after U.S. daily production surged to a record high of 13.3 million barrels a day last week, the Energy Information Administration reported Thursday.

Moreover, Anglo announced it is leaving OPEC+ after disagreement with the 2024 production quota.

Angola's departure raised doubts about the oil cartel's ability to control crude oil prices in 2024 as member nations struggle with rising global supplies amid stable demand from China.

WTI crude oil decreased $0.92 to $72.39 a barrel, and natural gas prices increased 10 cents to $2.55 a thermal unit.

Gold advanced $10.86 to $2,041.79 an ounce and extended this year's gains to 13.5%.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 102.06 and extended the previous week's loss of 1.4% and the loss of 0.9% in the year so far.

 

U.S. Stock Movers

Micron Technology advanced 7.4% to $84.47 after the advanced semiconductor chipmaker reported better-than-estimated revenue and a smaller-than-expected loss in its latest quarter.

The company's forward-looking quarterly revenue outlook was also ahead of some investors' estimates.

CarMax jumped 8.5% to $80.98 after the used car retailer reported better-than-expected quarterly results.

Boeing Company increased 1.7% to $264.70 after receiving approval from a Chinese aviation regulator to resume 737 Max deliveries to Chinese airlines.

Boeing still needs approval from China's National Development and Reform Commission, according to the trade publication Air Current.

Warner Bros. Discovery increased 0.1% to $11.70, Paramount Global decreased 1.4% to $15.28, and two companies were engaged in preliminary merger talks, according to a report by CNBC.

 

European Bond Yields Ease to One-year Low

European markets lacked direction with a downward bias, and investors booked profit ahead of the yearend.

The DAX index and the CAC-40 index edged down 0.5% in Thursday's session but gained above 18% and 14%, respectively, in the year so far.

Investors also reviewed the latest economic data from France and the government finance update from the UK.

 

France Business Confidence Indicator Rises to a 5-month High

The manufacturing climate indicator in France rose to 100 in December from 99 in November, the statistical agency INSEE reported Thursday.

The index rose to a five-month high since July, after inflation continued to ease and consumer spending remained resilient.

The opinion for finished goods inventory and past production showed improvement, but the opinion on overall new orders remained unchanged.

Meanwhile, the outlook for selling prices showed a slight deterioration, and the indicator measuring perceived economic uncertainty showed a slight improvement.

 

UK Public Sector Borrowing Remains Elevated   

Public sector borrowing in November declined from a year ago and from the previous month, but the November month borrowing was still the fourth-largest since record-keeping began in 1993, the Office for National Statistics reported Thursday.

Borrowings, excluding public sector banks, eased to £14.33 billion, a decline of £0.9 billion from a year ago and eased from £16.0 billion in October. 

The central government's spending rose from £0.7 billion to a record high of £87.6 billion.

Government spending on goods and services was £33.6 billion, net social benefits were £24.2 billion, subsidies were £2.2 billion, and the interest payable on central government debt was £7.7 billion.

The central government's receipts were £77.6 billion, an increase of £3.6 billion from a year ago and the highest in November since monthly records began in 1993.

Of this £77.6 billion, tax receipts were £58.2 billion, £2.7 billion more than in November 2022, with value-added tax (VAT) receipts and income tax receipts both increasing by £1.4 billion.

Borrowing in the financial year-to-November 2023 was £116.4 billion, £24.4 billion more than in the same eight-month period last year and the second highest financial year-to-November borrowing on record, the ONS release noted.

Public sector net debt rose 1.8% to £2.67 trillion at the end of November and rose to 97.5% of the UK's gross domestic product.

Excluding the Bank of England, debt was £2.42 trillion, or about 88.3% of GDP, or £252.8 billion (or 9.2 percentage points) lower than the wider measure.

 

Europe Indexes and Yields

The DAX index decreased 0.3% to 16,687.42, the CAC-40 index fell 0.2% to 7,571.40, and the FTSE 100 index declined 0.3% to 7,694.73.

The yield on 10-year German bonds decreased to 1.97%; French bonds inched lower to 2.48%; the UK gilts inched lower to 3.54%; and Italian bonds inched lower to 3.60%.

The euro traded higher to $1.094, the British pound inched higher to $1.262, and the U.S. dollar eased to 86.18 Swiss cents.

Brent crude decreased $1.01 to $78.69 a barrel, and the Dutch TTF natural gas decreased by €1.02 to €34.20 per MWh.

 

Europe Stock Movers

Swisscom AG decreased 0.6% to CHF 505.60 after reports suggested that the telecom operator is looking to bid for Vodafone Italia.

Alstom SA declined 0.6% to €12.12, and the company emerged as the winning bidder for a €900 million contract to maintain regional rolling stock in Victoria, Australia.

Sanofi SA dropped 0.4% to €88.80 after the company said it was ending the global clinical development program of tusamitamab ravtansine to treat certain types of lung cancer after the phase 3 trial did not meet its criteria.

Eni SpA decreased 0.05% after the Italian energy company announced an investment agreement with Switzerland-based Energy Infrastructure Partners AG.

The Swiss investment company agreed to invest €0.7 billion in Eni Plentude SpA, which focuses on gas and energy distribution and manages the electric vehicle charging station network.

Artemis Alpha Trust fell 1.0% to 338.56 pence after the company reported a fiscal first-half pre-tax loss of £11.4 million.

HICL Infrastructure PLC decreased 0.5% to 136.30 pence after the investment company announced it had agreed to acquire a 3.1% stake in the A63 highway concession in France for £20 million from another shareholder.