Volatility remains low on Wall Street after the fiscal cliff
saga was resolved at the beginning of the year. The long-term
uptrend for equities remains intact and investors seem content to
sit on their hands and ride the gentle upswing in stock prices for
the time being. The major story for the market right now is the
beginning of earnings season which was kicked off yesterday with
reports from Monsanto (NYSE:
) and Alcoa (NYSE:
Domestic Crude Oil Output - Weekly data released by the Energy
Information Administration showed that soaring domestic production
of crude oil continues to lead a decline in imported crude. For the
week ended January 4, imports fell to 7.9 million barrels per day,
a nearly 16 percent year-over-year decline.
U.S. oil production is now at its highest level since March 1993
and the International Energy Agency predicts that the United States
will surpass Saudi Arabia in crude production by 2020. The new
American oil boom has been triggered by technological drilling
breakthroughs which are being used in the large shale formations
that have been discovered all over the country.
The Dow Jones Industrial Average closed the session with a gain
of almost 62 points to 13,390. On a percentage basis, the Dow added
The S&P 500 climbed a little less than 4 points, or 0.27
percent, to close the day at 1,461.
The Nasdaq was the second leading major market average after the
Dow, adding 14 points, or 0.45 percent, to close at 3,106.
The U.S. dollar was higher on Wednesday with the PowerShares DB
US Dollar Index Bullish ETF (NYSE:
), which tracks the performance of the greenback versus a basket of
foreign currencies, adding 0.27 percent heading into the closing
bell. The closely watched EUR/USD pair was last trading down 0.19
percent to $1.3054.
Most of the other major currency pairs were close to flat on the
day with the exception of the USD/JPY. At last check, the greenback
had risen a little over one percent against the Yen.
Crude oil was only very slightly negative on Wednesday's trading
session. At last check, NYMEX crude futures had lost 0.05 percent
and were trading at $93.10.
Brent crude contracts, the benchmark for European crude, had
lost 0.30 percent to $111.61.
Natural gas remains in a downtrend and had shed almost 3 percent
on the day to $3.13.
Precious metals prices were also slightly lower on the session.
COMEX gold futures had lost 0.28 percent and were trading at
$1,657.40 while silver futures were down 0.41 percent to $30.34.
Copper prices were very slightly positive on the day.
Corn and wheat futures headed in opposite directions on
Wednesday with CBOT corn contracts rising 0.80 percent and wheat
falling around 0.70 percent. Volatility was limited in the soft
commodity complex with the only mover over 1 percent being orange
juice concentrate which rose 1.23 percent.
Long-term Treasury prices were slightly close to unchanged on
the session. The iShares Barclays 20+ Year Treasury Bond ETF (NYSE:
) fell 0.09 percent to $119.12.
Despite the small loss for the TLT, yields actually ticked
slightly lower in shorter-term debt. The yield on the 2-Year Note
fell one basis point to 0.24 percent while the 5-Year yield loss 2
basis points to 0.76 percent.
The yield on the 10-Year Treasury Note declined one basis point
to 1.85 percent while the 30-Year Bond yield was unchanged at 3.06
Volatility and Volume
The VIX, which has been in a steep downtrend, rose a little less
than 2 percent on Wednesday despite higher stock prices. At just
below 14, the VIX is sitting at a level where it makes sense for
investors to buy some protection for their portfolios even if they
are not expecting a spike in volatility.
Volume was very light for the third day this week. Only around
73 million SPDR S&P 500 ETF (NYSE:
) shares traded hands on the session compared to a 3-month daily
average of over 141 million. Overall, the markets are very quiet
) shares were volatile on the day after noted hedge fund manager
Dan Loeb revealed an 8.2 percent stake in the company which has
been targeted by short-seller Bill Ackman and his hedge fund
Pershing Square Capital Management.
Loeb runs Third Point Capital. Dow Jones reported that the SEC
had opened an inquiry into the company. The stock closed the day
with a gain of a little more than 4 percent to $39.95.
Apollo Group (NASDAQ:
) fell almost 8 percent on the session to $19.33 after the company
reported its first-quarter earnings results on Tuesday after the
closing bell. Apollo lowered the top range of its full-year revenue
guidance and the soft sales outlook weighed on the entire for
profit education sector. DeVry (NYSE:
) lost 5 percent, ITT Educational Services (NYSE:
) shed 5 percent and Strayer Education (NASDAQ:
) lost nearly 8 percent.
) rose more than 7 percent on the day after Dish Network (NASDAQ:
) put in a competing bid for the company which has already received
a buyout offer from Sprint (NYSE:
) surged more than 5 percent to $30.59 as traders speculated about
an upcoming corporate event scheduled for next Tuesday.
Mistras Group (NYSE:
) fell 11 percent on Wednesday after the company released its
quarterly earnings results on Tuesday after the market close.
Comstock Resources (NYSE:
) fell almost 8 percent on the session after issuing disappointing
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