Stock Market News for September 15, 2015

Benchmarks ended in the red on Monday as investors refrained from buying ahead of the two-day FOMC meeting scheduled to begin on Wednesday. China disappointed markets again after reporting lower-than-expected investment and factory output for August. Dismal China data increased fears of slowing demand, dragging oil prices lower. Energy sector was thus the second biggest laggard while materials sector lost the most.

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The Dow Jones Industrial Average (DJI) lost nearly 0.4% to close at 16,370.96. The Standard & Poor's 500 (S&P 500) dropped over 0.4% to end the day at 1,953.03. The tech-laden Nasdaq Composite Index closed at 4,805.76, down by over 0.3%. The fear-gauge CBOE Volatility Index (VIX) gained 4.5% to settle at 24.25. A total of about 5.4 billion shares were traded on Monday, lower than the past 20 trading days' average of 8 billion. Declining stocks outpaced advancers on the NYSE. For 65% stocks that declined, 32% ended higher.

On a lackluster day devoid of key events and economic data that could boost markets, rate hike uncertainty remained the focal point. Investors refrained from betting on stocks, as they await the outcome of the Federal Open Market Committee's two-day policy meet. The meeting, scheduled to start on Wednesday, is closely watched as it may reveal if the Fed finally decides to hike key rates. The last rate hike had come in 2006, after which the Fed had to keep rates at historic lows to boost the flagging economy.

However, it is not certain what the decision would be. Opinions are split regarding the announcement of a rate hike. The Fed funds futures market had priced in a 25% chance of rate hike. While traders of short term interest rate futures are giving a one-in-four chance of a rate hike, primary dealers or economists from banks dealing directly with the Fed have picked December to have higher chances of the rate hike coming in. Conflicting data points also have intensified the uncertainty.

While lingering doubts restricted investors from betting big bucks, data from China proved to be dismal once more. Fears of China-led global slowdown intensified after the National Bureau of Statistics in China showed China's fixed-asset investment growth slowed to 10.9% in the first eight months of 2015. This is the weakest in about 15 years. Alongside, factory output increased 6.1% in August from prior year period. This missed the market expectations of a 6.4% gain. China stocks dropped in the most in three weeks and also dampened sentiment in the US markets.

Dismal China data also raised fears of lower demand for crude; thereby dragging crude prices lower on Monday. WTI crude oil plunged 2.9% to $44.63 and Brent crude oil was down 1.6% to $48.14. The plunge followed Friday's decline that was triggered by Goldman Sachs ( GS ) analysts cutting oil price forecast through next year.

Eventually, the energy sector was the second biggest drag on the markets on Monday. The Energy Select Sector SPDR ETF (XLE) plunged 0.9%. Key stocks including Valero Energy Corporation ( VLO ), Occidental Petroleum Corporation ( OXY ), EOG Resources, Inc. ( EOG ), Schlumberger Limited ( SLB ) and Exxon Mobil Corporation ( XOM ) declined 3.5%, 1.1%, 0.9%, 1.2% and 0.3%, respectively.

Nine of the 10 S&P industry groups finished in the negative territory. The biggest loser was the Materials Select Sector SPDR ETF (XLB) as it slumped 1.2%. key holdings such as The Dow Chemical Company ( DOW ), Monsanto Company ( MON ), E. I. du Pont de Nemours and Company ( DD ), LyondellBasell Industries N.V. ( LYB ) and PPG Industries, Inc. ( PPG ) lost 1.6%, 2.5%, 1%, 1.7% and 2.7%, respectively.

Separately, Alibaba Group Holding Limited ( BABA ) and its stake owner Yahoo! Inc. ( YHOO ) took big hits after a news report suggested that Alibaba may see a 50% decline in stock prices. Alibaba's shares plunged 3.1% and Yahoo lost 3.5%. On the other hand, a favorable report suggesting new iPhone program may boost Apple Inc.'s ( AAPL ) stocks by 50% helped the iPhone maker gain nearly 1% yesterday.

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DOW CHEMICAL (DOW): Free Stock Analysis Report

MONSANTO CO-NEW (MON): Free Stock Analysis Report

DU PONT (EI) DE (DD): Free Stock Analysis Report

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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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