Markets

Midday Update: Stocks Pare Gains as Oil Rout Continues

Stocks have returned most of their earlier gains, with the S&P 500 and other benchmark indices Wednesday barely on the plus side today after the government's weekly inventory report sent crude oil prices plummeting from more oversupply pressures and also driving energy shares sharply lower.

The early upbeat mood for Wall Street today soured in the wake of disappointing industrial production and manufacturing data, with the downturn accelerating after the Department of Energy reported an increase in commercial supplies over prior-week levels of 4.8 million barrels during the seven days ended Dec. 11 compared with expert opinion looking for a 2.5 million barrel decline.

With less than 90 minutes before the Federal Reserve's decision on interest rates, economic data today indicated manufacturing was slowing but the housing market remains robust. November housing starts increased 10.5% to a seasonally-adjusted annual rate of 1.173 million, beating expectations for a 1.141 million yearly pace. October levels also were revised slightly higher to an annualized 1.062 million homes from initially reports of a 1.060 million rate.

The number of building permits pulled during November increased 11.0% to an annualized rate of 1.289 million, beating the consensus estimate looking for a 1.146 million pace. October was also revised upward to a 1.161 million annual rate from 1.150 million.

In the manufacturing sector, industrial production contracted 0.6% during November, significantly weaker than the 0.2% contraction the markets were expecting. October production also was revised lower to a 0.4% decline from initial reports of a 0.2% drop. Capacity utilization also slowed to 77.0% from 77.5% in October, missing estimates for a smaller decline to 77.4%.

Also, the purchasing manager's index for the manufacturing sector fell to a preliminary 51.3 reading from November's final 52.6 score. Analysts had expected a slight improvement to a 52.8 flash reading this month.

Europe's markets also gave back some of their overnight gains but still managed a positive close as investors squared positions ahead of the 2:00 p.m. ET Fed announcement. Energy stocks squeezed out modest gains despite the stateside sell-off for oil while banking stocks continued to find support on expectations for higher U.S. lending rates.

Crude oil was down $1.57 to $35.78 per barrel. Natural gas was down 3 cents to $1.92 per 1 million BTU. Gold was up $13.70 to $1,075.30 per ounce, while silver was up 39 cents to $14.16 per ounce. Copper was up 2 cents to $2.08 per pound.

Among energy ETFs, the United States Oil Fund was down 3.28% to $11.02 with the United States Natural Gas Fund was down 0.85% to $6.98. Among precious-metal funds, the Market Vectors Gold Miners ETF was up 3.15% to 14.07 while SPDR Gold Shares were up 1.40% to $102.94. The iShares Silver Trust was up 3.13% to $13.52.

Here's where the U.S. markets stood at mid-day:

NYSE Composite Index up 52.57 (+0.52%) to 10,163.50

Dow Jones Industrial Average up 36.47 (+0.21%) to 17,561.38

S&P 500 up 8.01 (+0.39%) to 2,051.42

Nasdaq Composite Index up 16.17 (+0.32%) to 5,011.53

GLOBAL SENTIMENT

Nikkei 225 Index up 2.61%

Hang Seng Index up 2.01%

Shanghai China Composite Index up 0.17%

FTSE 100 Index up 0.72%

CAC 40 up 0.22%

DAX up 0.18%

NYSE SECTOR INDICES

NYSE Energy Sector Index down 0.90%

NYSE Financial Sector Index up 0.47%

NYSE Healthcare Sector Index up 0.44%

UPSIDE MOVERS

(+) ACST (+55.67%) FDA provides encouraging comments on potential hypertriglyceridemia treatment

(+) JRJC (+38.82%) Swings to Q3 profit on jump in sales

(+) SCTY (+26.52%) Congress to extend tax credits for solar/wind power

(+) ISH (+14.37%) Sold supramax for $11 million, pursuing sale of non-core assets

DOWNSIDE MOVERS

(-) RPXC (-13.99%) Paying $232 million to buy legal discovery services from Inventus Solutions

(-) GPN (-11.38%) Heartland Payment Systems ( HPY ) to be bought by Global Payments in cash and stock deal

(-) NUE (-4.83%) Provided weak Q4 earnings guidance due to continued deterioration in global steel markets

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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