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Stock Market News for November 25, 2015

Benchmarks recovered from early losses to finish in the green on Tuesday as jump in energy shares offset heightened geopolitical tensions and mixed economic data. While news regarding shot down of Russian fighter jet near the border of Syria had a negative impact on markets in early trading, the same helped the oil prices to surge yesterday. Though dismal consumer confidence data dampened investor sentiment, upbeat GDP report helped in offsetting the impact.

For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) rose 0.1% to close at 17,812.19. The Standard & Poor's 500 (S&P 500) also gained 0.1% to close at 2,089.14. The tech-laden Nasdaq Composite Index closed at 5,102.81, rising a meager 0.01%. However, the fear-gauge CBOE Volatility Index (VIX) increased 2% to settle at 15.93. A total of around 6.9 billion shares were traded on Tuesday, lower than the last 20-session average of 7.2 billion. Advancers outpaced declining stocks on the NYSE. For 60% stocks that advanced, 37% declined.

Markets opened in negative territory on Tuesday following news that Russian fighter jet SU-24 was shot down by two Turkish F16 jets near the border between Turkey and Syria. It was reported that a Russian war plane entered in Turkish airspace before it got shot down. Turkish President Recep Tayyip Erdogan said that people living in the border area are Turkmen and not ISIS. He said since the war plane did not respond to their warnings, they opted to shoot it down.

However, Russia declined the claim of entering in the airspace of Turkey. Russian President Vladimir Putin said: "The plane fell on Syrian territory 4 kilometers (2.5 miles) away from the Turkish border. It was flying 1 kilometer away from the Turkish border when it was attacked." It is speculated that downing of the Russian fighter plane by Turkey, a NATO member, is guaranteed to further escalate the geopolitical tension. With the Russian president, Vladimir Putin calling the jet downing as 'a stab in the back,' it will take some serious diplomacy to keep a united anti-ISIS coalition cobbled together.

This incident had a high impact on oil prices yesterday. Prices of WTI crude oil and Brent crude oil rose 2.6% and 2.8% to $42.87 per barrel and $46.12 a barrel, respectively. Rise in oil prices boosted the Energy Select Sector SPDR (XLE) that gained 2.1%. It was also the best performing sector among the S&P 500 sectors. Key stocks from the sector including ConocoPhillips ( COP ), Halliburton Company ( HAL ), Kinder Morgan, Inc. ( KMI ), EOG Resources, Inc. ( EOG ) and Exxon Mobil Corporation ( XOM ) gained 3.8%, 3.6%, 3.1%, 3.1% and 2%, respectively.

However, rise in oil prices and issue of an alert for Americans regarding flying across the globe had a negative impact on the airlines sector. The State Department said that different terrorist groups including ISIS, al-Qaeda and Boko Haram are planning to organize "terrorist attacks in multiple regions," which may pose threat to Americans planning to travel throughout the globe. Key stocks from airlines sector including Southwest Airlines Co. ( LUV ), American Airlines Group Inc. ( AAL ), Delta Air Lines, Inc. ( DAL ), United Continental Holdings, Inc. ( UAL ) and Virgin America Inc. ( VA ) lost 2.6%, 2.5%, 3.1%, 3% and 2%, respectively.

In economic news, the U.S. Department of Commerce reported in its "second" estimate that the economy grew at a pace of 2.1% in the third quarter, compare to earlier projected growth rate of 1.5%. Also, third quarter's growth rate came in higher than the consensus estimate of 2% growth. An upward revision in business inventories emerged as the main reason behind the expansion in the quarter. Business inventories were revised upward from $56.8 billion reported in "advance" estimate to $90.2 billion. However, third quarter growth remained below third quarter's rate of 3.9%.

Meanwhile, S&P/Case-Shiller index for both 20 cities and 10 cities rose at a rate of 0.2% through July to September, indicating rise in prices in the sector. Prices in 20 cities increased at a pace of 5.5% in September year on year, compared to 5.1% rise in August. San Francisco was the best performer in September as the region witnessed a record year-over-year growth rate of 11.2% in the reported month.

However, the Conference Board reported that Consumer Confidence Index declined to 90.4 in November from 99.1 in October. It was also lower than the consensus estimate of 99.6. Lynn Franco, Director of Economic Indicators at The Conference Board said: "Consumer confidence retreated in November, following a moderate decrease in October… The decline was mainly due to a less favorable view of the job market."

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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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