U.S. stocks closed mostly higher on Tuesday after a volatile session, reversing stiff decline in previous two trading days. However, Wall Street gained modestly as investors remain concern about a fourth rate hike by the Fed, plummeting crude oil prices and a possible government shutdown. The Dow and Nasdaq Composite ended in the green while the S&P remained flat.
The Dow Jones Industrial Average (DJI) closed at 23,675.64, increasing 0.4%. The S&P 500 Index (INX) gained 22 points to close at 2,546.16. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,738.91, climbing 0.5%. A total of 9.18 billion shares were traded on Tuesday, higher than the last 20-session average of 8.06 billion shares. Decliners outnumbered advancers on the NYSE by 1.14-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.43-to-1 ratio. The CBOE VIX increased 4.3% to close at 25.58.
How Did the Benchmarks Perform?
The Dow ended in positive territory reversing its two-day losing streak. During Tuesday's trading the blue-chip index was up 335 points at its high and fell 77 points at it low. Notably, 14 components of the 30-stock index finished in the green while 16 components finished in the red.
The S&P 500 gained marginally reversing its three-day losing streak. During Tuesday's trading the benchmark index was up 28 points at its high and fell 17 points at it low. The Energy Select Sector SPDR (XLE) and Consumer Staples Select Sector SPDR (XLP) lost 2.4% and 1.2%, respectively. However, Real Estate Select Sector SPDR (XLRE) and TechnologySelect Sector SPDR (XLK) were up 1% and 0.8%, respectively. Notably, 6 out of a total 11 sectors of the broad-market index finished in green and the remaining 5 closed in the red. .
The tech-heavy Nasdaq Composite ended in the green reversing three-day losing run due to strong performance by FAANG giants. During Tuesday's trading the tech-laden index was up 83 points at its high and fell 20 points at it low.
Fed Likely to Hike Rate in December
The Federal Reserve is widely expected to hike its benchmark lending rate by 0.25% for the fourth time in December following its meeting on Dec 18 and 19. Moreover, the Fed's monetary outlook for 2019 will be very crucial for the investors to form interest rate expectations.
Meanwhile, President Donald Trump has severely criticized the Fed for adopting an aggressive monetary stance which according to him is acting as a hindrance to realize full potential of his government's fiscal stimulus.
Crude Oil Prices Plunge
On Dec 17, January U.S. benchmark the West Texas Intermediate crude oil price dropped $3.64 or 7.3% to settle at $46.24 a barrel on the New York Mercantile Exchange., reflecting its lowest finish for a front-month contract since Aug. 30, 2017. Likewise, February global benchmark the Brent crude oil price tumbled $3.35 or 5.6% to $56.26 a barrel on ICE Futures Europe, marking its lowest finish since Oct 12, 2017.
Industry experts blamed strong oversupply from both the United States and Russia along with a weak global demand is primary reason for oil price slide. Consequently, shares of Exxon Mobil Corp. XOM and Chevron Corp. CVX dropped 2.8% and 2.4%, respectively. Both Exxon and Chevron carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Possibility of Government Shutdown
On Dec 18, Senate Majority Lead Mitch McConnell said that a proposed government funding plan was rejected by Democrat representatives. The White House proposed an appropriations bill that includes money for border security fencing. However, the $5 billion border fencing planwas rejected by the Democrats. Notably, without the approval of a spending bill, several government agencies may face the risk of a shutdown.
The Department of Commerce reported that Housing starts in November increased 3.2% to seasonally adjusted 1.256 million, higher than the consensus estimate of 1.23 million. However, the figure declined 3.6% year over year. Housing permit in November increased 5% to seasonally adjusted 1.328 million, higher than the consensus estimate of 1.267 million.
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