Stock Market News for September 24, 2015

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Benchmarks ended in the red for the second consecutive day on Wednesday, led by losses in energy and materials shares. While shares of energy producers took a beating due to drop in oil prices , shares of raw material producers slumped as China's manufacturing activity plunged to a six and a half year low in September. Additionally, a slowdown in Eurozone's manufacturing and service sectors did little to boost investor sentiment.

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The Dow Jones Industrial Average (DJI) declined 0.3% to close at 16,279.89. The Standard & Poor's 500 (S&P 500) dropped 0.2% to 1,938.76. The tech-laden Nasdaq Composite Index closed at 4,752.74, decreasing almost 0.1%. The fear-gauge CBOE Volatility Index (VIX) declined 1.4% to settle at 22.13. A total of around 5.9 billion shares were traded on Wednesday, below the last 20-sessions' average of 8 billion. Decliners outpaced advancing stocks on the NYSE. For 56% stocks that declined, 40% advanced.

Benchmarks ended slightly lower on Wednesday due to decline in energy shares; which in turn was a result of a rout in crude oil prices . Oil prices had moved north earlier in the session due to lower crude inventories. However, rise in oil prices was offset by large buildup in U.S. gasoline stocks, which eventually dragged oil prices into negative territory.

Data from the Energy Information Administration showed that crude oil inventories decreased by 1.9 million barrels for the week ending Sep 18. However, during the same week, gasoline inventories increased by 1.4 million barrels. The prices of WTI crude oil and Brent crude oil declined 4.2% and 2.3% to $44.48 per barrel and $47.75 a barrel, respectively.

The Energy Select Sector SPDR (XLE) declined 1.3%, the second highest among the S&P 500 sectors. Dow components Exxon Mobil Corporation ( XOM ) and Chevron Corporation ( CVX ) dropped 0.6% and 1.5%, respectively. Other key stocks from the energy sector including Schlumberger Limited ( SLB ), ConocoPhillips ( COP ) and Kinder Morgan, Inc. ( KMI ) decreased 1.5%, 1.3% and 1.5%, respectively.

Shares of raw material producers also tumbled after China's manufacturing data fell to its lowest level in September since Mar 2009. The preliminary Caixin China Manufacturing Purchasing Managers' Index declined to 47 in September, lower than last month's final reading of 47.3. The gauge of nationwide manufacturing activity remained below 50, indicating contraction.

The Materials Select Sector SPDR ETF (XLB) declined 2.1% and was the biggest loser among the S&P 500 sectors. Key holdings such as The Dow Chemical Company ( DOW ), Monsanto Company ( MON ), LyondellBasell Industries N.V. ( LYB ), PPG Industries, Inc. ( PPG ) and Praxair Inc. ( PX ) decreased 2.3%, 2.5%, 2%, 1.8% and 2.7%, respectively. Overall, 5 out of 10 sectors of the S&P 500 ended in the red.

Meanwhile, signs of a slowdown in Eurozone's economic growth added to the bearish sentiment. Eurozone's manufacturing and services activity fell moderately in September. The Markit composite purchasing managers index declined to 53.9 in September from 54.3 in August.

The European Central Bank (ECB) warned that the current slowdown in China and other emerging economies may hinder the recovery process in Eurozone and also weaken the region's export demands. Additionally, ECB President Mario Draghi opened doors for more quantitative easing program to curtail the threat of low inflation in the region.

Coming to the domestic front, the Markit preliminary U.S. Manufacturing Purchasing Managers' Index for September came in at 53, unchanged from August's figure. The reading had already touched its lowest level in August since Oct 2013.

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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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