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Stock Market News for December 14, 2015

Benchmarks ended in the red on Friday dragged down by decline in energy shares due to further slump in oil prices . U.S. crude oil price settled below $36 a barrel on Friday and suffered its biggest weekly loss of the year after a report from the IEA indicated "greater pessimism" about supply of oil. An abrupt closure of a high-profile junk bond mutual fund also added to the bearish sentiment. Benchmarks ended the week lower as commodity prices continue to tumble. The S&P 500 posted its biggest weekly decline since August.

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The Dow Jones Industrial Average (DJI) dropped 309.54 points or 1.8% to close at 17,265.21. The Standard & Poor's 500 (S&P 500) declined 1.9% to close at 2,012.37. The tech-laden Nasdaq Composite Index closed at 4,933.47, decreasing 2.2%. The fear-gauge CBOE Volatility Index (VIX) surged 26.1% to settle at 24.39, above its long term average of 20. A total of around 8.3 billion shares were traded on Friday, higher than the last 20-session average of 6.98 billion. Decliners outpaced advancing stocks on the NYSE. For 87% stocks that declined, 12% advanced.

Another rout in crude oil prices negatively impacted the broader markets on Friday. Crude oil prices spiraled down after the International Energy Administration (IEA) said abundant supply of oil will persist till next year even though demand for oil continues to decline. Price of WTI crude oil dropped 3.2% to $35.62 a barrel on Friday.

For the week, WTI crude oil declined 10.9%, its largest weekly loss since the week ended Dec 12, 2014. WTI crude oil price also posted its sixth straight session of losses, its longest losing streak since March. Meanwhile, price of Brent crude oil declined 4.8% to $37.93 a barrel on Friday, its lowest settlement price since Dec 2008. Brent crude oil declined 11.8% over last week.

Energy shares took a beating on Friday due to drop in oil prices. The Energy Select Sector SPDR (XLE) dropped 3.7%, the highest among the S&P 500 sectors. Dow components Exxon Mobil Corporation ( XOM ) and Chevron Corporation ( CVX ) declined 1.8% and 3.2%, respectively. Other key stocks from the energy sector such as Occidental Petroleum Corporation ( OXY ), ConocoPhillips ( COP ) and Kinder Morgan, Inc. ( KMI ) decreased3.5%, 2.2% and 2.1%, respectively.

Separately, the Materials Select Sector SPDR ETF (XLB) declined 2.7% and was the second biggest loser among the S&P 500 sectors. Key stocks from the sector including Freeport-McMoRan Inc. ( FCX ), E. I. du Pont de Nemours and Company ( DD ), Monsanto Company ( MON ), The Dow Chemical Company ( DD ) and Praxair Inc. ( PX ) decreased 6.3%, 5.5%, 2.6%, 5.5% and 1.3%, respectively. Overall, all the 12 sectors of the S&P 500 ended in the red.

Meanwhile, U.S. junk bonds registered their biggest decline since 2011 raising concerns that a six-year bull market for stocks is nearing its end. The Third Avenue Management LLC liquidated the $789 million Third Avenue Focused Credit Fund. As a result, investors were prevented from withdrawing money that they have invested in the fund.

In economic news, the U.S. Department of Commerce reported that retail sales gained 0.2% in November after increasing 0.1% in October. The monthly gain was in line with consensus estimate. Excluding auto, sales in November improved 0.4%.

The Bureau of Labor Statistics reported that the Producer Price Index increased at a seasonally adjusted rate of 0.3% in November, while the consensus estimate expected it to remain unchanged. The increase was preceded by October's decline of 0.4%.

Separately, the U.S. Department of Commerce reported that business inventories remained unchanged in October. The consensus estimate expected it to rise by 0.1%.

For the week, the S&P 500, the Dow and the Nasdaq declined 3.8%, 3.3% and 4.1%, respectively. Benchmarks ended the week in the red due to declines in energy and material shares. Continuous decline in oil prices had a negative impact on energy shares. U.S. crude oil prices continue to hover near seven year low on fears of a continuing supply glut. OPEC had increased its oil production in November to its highest level since 2012. Moreover, mild weather intensified the downward pressure on oil prices.

Meanwhile, China's discouraging trade data reignited fears of a global slowdown, which intensified downward pressure on material stocks. Separately, declines in technology and consumer discretionary shares also weighed on the broader markets.

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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.


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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