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Stock Market News for December 16, 2015

Benchmarks ended in the green for the second straight session on Tuesday, led by gains in energy and financial shares. Energy shares ended in positive territory as oil prices improved from multi-year lows. U.S. crude oil price settled above $37 a barrel as investors bet on a weekly decline in U.S. crude stockpiles. Financials shares also ended higher, banking on expectations that Fed will hike rates for the first time in almost a decade at the end of its ongoing two-day policy meeting.

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The Dow Jones Industrial Average (DJI) gained 0.9% to close at 17,524.91. The Standard & Poor's 500 (S&P 500) advanced 1.1% to close at 2,043.41. The tech-laden Nasdaq Composite Index closed at 4,995.36, increasing 0.9%. The fear-gauge CBOE Volatility Index (VIX) plunged 7.8% to settle at 20.95. A total of around 21.8million shares were traded on Tuesday on the NYSE. Advancers outpaced declining stocks on the NYSE. For 77% stocks that advanced, 21% declined.

U.S. crude oil price continued to rebound from nearly seven-year low on Tuesday on expectations that U.S. crude inventories declined last week. According to The Wall Street Journal , the U.S. Energy Information Administration may a decline in crude supplies by 1.4 million barrels for the week ending Dec 11 report on Wednesday.

Separately, pricing agency Platts forecasted U.S. crude inventories would decline by 2.5 million barrels for the same period. Meanwhile, Congress is expected to lift a 40-year old ban on oil exports. This move could benefit U.S. oil prices since a large number of buyers will compete for U.S. crude.

U.S. crude oil prices had stayed near their seven-year low last week on fears of continued supply glut. Additionally, mild weather had intensified the downward pressure on oil prices. Nevertheless, WTI crude oil price increased for the second consecutive day on Tuesday, gaining 2.8% to settle at $37.35 a barrel. Additionally, Brent crude oil advanced 1.4% to end at $38.45 a barrel.

Another rebound in U.S. crude oil price lifted energy shares on Tuesday. The Energy Select Sector SPDR (XLE) gained 2.5%, the second highest among the S&P 500 sectors. Dow components Exxon Mobil Corporation ( XOM ) and Chevron Corporation ( CVX ) advanced 4.5% and 3.8%, respectively. Other key stocks from the energy sector such as Occidental Petroleum Corporation ( OXY ), ConocoPhillips ( COP ) and Schlumberger Limited ( SLB ) increased 2.7%, 2.1% and 2.6%, respectively.

Meanwhile, investors remained focused on the Federal Reserve's policy statement and news conference for hints on the timing of a rate hike. They are also keeping a close watch on the pace of a rate hike. The Fed is expected to hike rates during its two-day policy meeting, which will conclude on Wednesday. According to the CME Group's FedWatch program, there is a more than 80% chance that the Fed will raise its benchmark interest rates to 0.25% to 0.5% from its current zero to 0.25% range.

Possibility of a rate hike this month had a positive impact on the financial sector. The Financial Services Select Sector SPDR (XLFS) gained 3.2% and was the biggest gainer among the S&P 500 sectors. Top holdings from the sector such as Wells Fargo & Company ( WFC ), JPMorgan Chase & Co. ( JPM ), Berkshire Hathaway Inc. ( BRK-B ), Bank of America Corporation ( BAC ) and Citigroup Inc. ( C ) increased 3.2%, 2.9%, 2.8%, 3.7% and 2.8%, respectively. Overall, all 12 sectors of the S&P 500 ended in the green.

In economic news, the Labor Department reported that Consumer Price Index (CPI) remained unchanged in November, in line with the consensus estimate. This was preceded by a 0.2% increase in October. Core CPI, which excludes food and energy prices gained 0.2% last month, in line with the consensus estimate.

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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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