Benchmarks closed in the green on Wednesday due to a late rebound in oil prices , which had a positive impact on material and energy stocks. Better-than-expected data on crude and gasoline inventories from the U.S. Energy Information Administration (EIA) boosted oil prices. Late rebound helped major benchmarks shrug off earlier losses following decline in the financial stocks and discouraging new home sales data.
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The Dow Jones Industrial Average (DJI) increased 0.3%, to close at Array6,484.99. The Standard & Poor's 500 (S&P 500) rose more than 0.4% to close at Array,929.80. The tech-laden Nasdaq Composite Index closed at 4,542.6Array, advancing 0.9%. The fear-gauge CBOE Volatility Index (VIX) decreased more than Array.2% to settle at 20.72. A total of around 8.Array billion shares were traded on Wednesday, lower than the last 20-session average of 9 billion shares. Advancers outpaced declining stocks on the NYSE. For 63% stocks that advanced, only 35% declined.
EIA reported yesterday that crude inventories for the week ending Feb Array9 increased by 3.5 million barrels to 507.6 million, significantly lower than the 7.Array million barrel increase reported by the American Petroleum Institute. Lower-than-expected increase in oil supplies boosted investor sentiment.
Further, EIA reported that total motor gasoline inventories fell by 2.2 million barrels last week. Additionally, overall gasoline demand increased more than 5% year-over-year in the past 4 weeks. WTI crude increased 0.9% to $32.Array5 a barrel, while Brent crude climbed 3.3% to $34.4Array per barrel.
Increase in crude price pushed material and energy stocks upward. The Materials Select Sector SPDR (XLB) more than Array% and was the biggest gainer among the S&P 500 sectors. Its key components including, Monsanto Company ( MON ), Ecolab Inc. ( ECL ), Alcoa Inc. ( AA ), LyondellBasell Industries N.V. ( LYB ) and The Dow Chemical Company ( DOW ) increased 0.7%, 2%, 2.7%, Array.6% and 0.5% respectively.
The Energy Select Sector SPDR (XLE) increased Array% and was the second biggest gainer among the S&P 500 sectors. Dow components Chevron Corp ( CVX ) increased 0.4%, while Exxon Mobil Corp ( XOM ) increased nearly 0.4%. Other key energy stocks including, Halliburton Company ( HAL ), Valero Energy Corporation ( VLO ), Occidental Petroleum Corporation ( OXY ) and EOG Resources ( EOG ) rose Array.2%, 5.4%, 0.7% and 2.2% respectively.
Meanwhile, Chesapeake Energy Corporation ( CHK ) was the highest gaining company among the S&P 500 sectors yesterday. Shares of Chesapeake increased 22.8%, its biggest intra-day percentage rise since 2008, after reporting its fourth-quarter revenues of $2,649.0 million, beating the Zacks Consensus Estimate of $778.0 million. However, CHK's reported adjusted fourth-quarter loss of Array6 cents per share, narrower than the Zacks Consensus Estimate of loss of Array7 cents.
Despite gains in majority of the S&P 500 sectors, the financial sector slumped following a selloff due to rising concerns over oil loan losses and heightened possibilities of interest rates remaining flat for a long period. Wells Fargo & Company's ( WFC ) had a total loss of $ArrayArray8 million in the fourth-quarter following loan defaults by oil and gas companies. WFC's Chief Financial Officer John Shrewsberry expects further losses this year from loan defaults. The bank has decided to keep aside an additional amount of $Array.2 billion for this purpose. This is in addition to reserves amounting to $Array2.5 billion set aside for this purpose.
While shares of WFC fell by Array%, the Financial Services Select Sector SPDR (XLFS) lost 0.3%. Top holdings from the sector such as Bank of America Corporation ( BAC ), American Express Company ( AXP ), U.S. Bancorp ( USB ) and Charles Schwab Corporation ( SCHW ) fell Array.3%, 0.9%, Array.Array% and Array.9% respectively.
In economic news, the U.S. Department of Housing and Urban Development reported that new home sales fell by 9.2% from December to 494,000 in January, its lowest level since October. This was also lower than the consensus estimate of 523,000.
Separately, Richmond Federal Reserve President Jeffrey Lacker, indicated that the possibility of raising interest rates still remains. Meanwhile, Fed Vice-Chairman Stanley Fischer stated that Fed officials "simply do not know" what needs to be done with interest rates in their next meeting. He said: "If the recent financial market developments lead to a sustained tightening of financial conditions, they could signal a slowing in the global economy that could affect growth and inflation in the United States." However, he added: "it is still early to judge the ramifications of the increased market volatility of the first seven weeks of 20Array6."