Markets finished in positive territory on Monday as gains in utilities sector offset slump in energy shares. Reduced possibility of a rate hike in October's Fed meeting boosted utilities stocks yesterday. However, a plunge in oil prices had a negative impact on energy shares which in turn curbed some of yesterday's gain. Benchmarks witnessed a light-trading volume as most of the banks, federal institutions and the U.S. bond market remained closed due to the Columbus Day holiday. Meanwhile, the Dow ended in the green for seven-consecutive day, its longest winning stretch since December 2014.
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The Dow Jones Industrial Average (DJI) rose nearly 0.3% to close at 17,131.86. The Standard & Poor's 500 (S&P 500) gained more than 0.1% to close at 2,017.46. The tech-laden Nasdaq Composite Index closed at 4,838.64, rising 0.2%. The fear-gauge CBOE Volatility Index (VIX) declined 5.3% to settle at 16.17. A total of around 5.1 billion shares were traded on Monday, significantly lower than the last 20-sessions' average of 7.6 billion. Advancers outpaced declining stocks on the NYSE. For 51% stocks that advanced, 46% declined.
Reduced rate hike possibility in October's meeting following September's Fed minutes that released last Thursday and several statements from the Fed officials over the past few days continued to cheer investors. Though most of the Fed officials anticipated that the Fed may raise key interest rate this year, they showed some serious concerns about the sluggish global growth environment and remained doubtful about reaching the 2% inflation rate target. Moreover, September's dismal jobs report also played an important role in reducing rate hike fear.
On Monday, Atlanta Fed President Dennis Lockhart indicated that there is a possibility of a rate hike in October's meeting but the Fed may also consider waiting till December's meeting as there will be lot more data compared to that in October. He said: "I think October is a live meeting, clearly there is the potential that the data coming in, in advance of the October meeting will be sufficient … we have a lot more in December." Other important Fed officials including William Dudley, president of Federal Reserve Bank of New York and Chicago Fed President Charles Evans also signaled that the Fed may look for further improvement in overall economic environment before considering a rate hike.
Easing rate hike fears had a positive impact on the Utilities Select Sector SPDR (XLU), which gained 0.9% and was the best performer among the S&P 500 sectors. Key stocks from the sector including Southern Company ( SO ), American Electric Power Co., Inc. ( AEP ), Dominion Resources, Inc. ( D ), Duke Energy Corporation ( DUK ) and PPL Corporation ( PPL ) gained 1.5%, 1.5%, 1.4%, 0.8% and 1.2%, respectively.
Moreover, shares of UnitedHealth Group Incorporated ( UNH ) and NIKE, Inc. ( NKE ) that rose 2.7% and 1.2%, respectively, played an important role in boosting the Dow to end in positive territory. UnitedHealth was the best performer among the Dow components.
However, oil prices slumped on Monday after witnessing a rally last week. Prices of WTI crude oil and Brent crude oil dropped 5.4% and 5.6% to $47.10 per barrel and $49.86 a barrel respectively. WTI crude oil witnessed its biggest one day decline since Sep 1.
Plunge in oil prices dragged down the Energy Select Sector SPDR (XLE) by 1.3%, making it the worst performer among the S&P 500 sectors. Key energy stocks including Schlumberger Limited ( SLB ), Halliburton Company ( HAL ), Williams Companies, Inc. ( WMB ), Apache Corp. ( APA ) and Chevron Corporation ( CVX ) lost 1.9%, 2%, 2.9%, 3.3% and 0.9%, respectively.
Separately, Shares of EMC Corporation ( EMC ) gained 1.8% following news that Dell, along with MSD Partners, Silver Lake Partners and Temasek will acquire EMC for around $67 billion or $33.15 a share. However, shares of Eli Lilly and Company ( LLY ) plunged 7.8% after announcing that the company stopped the trial of its heart drug, evacetrapib. It was the biggest one-day decline in company's share in seven years. Eli Lilly was also the biggest loser among the S&P 500 sectors.
Meanwhile, investors remained focused ahead of third quarter earnings results' release of the financial sector this week. Starting with JPMorgan Chase & Co. ( JPM ), which will post its earnings result today, major players from the sector including The Goldman Sachs Group, Inc. ( GS ), Bank of America Corporation ( BAC ), Wells Fargo & Company ( WFC ) and Citigroup Inc. ( C ) will report their third quarter earnings results this week.
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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.
