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Stock Market News for October 09, 2015

Federal Reserve's decision to keep interest rates near zero in the September policy meeting helped benchmarks end higher on Thursday. Turmoil in financial markets and slowdown in Chinese economy were cited to be the reasons behind the Fed's dovish stance. Ultra-low interest rates have boosted the equity markets for the last six years.

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The Dow Jones Industrial Average (DJI) gained 0.8% or 138.46 points to close at 17,050.75. The Standard & Poor's 500 (S&P 500) advanced 0.9% to close at 2,013.43. The tech-laden Nasdaq Composite Index closed at 4,810.79, increasing 0.4%. The fear-gauge CBOE Volatility Index (VIX) declined 5.3% to settle at 17.42. A total of around 7.29 billion shares were traded on Thursday, lower than the last 20-sessions' average of 7.49 billion. Advancers outpaced declining stocks on the NYSE. For 76% stocks that advanced, 22% declined.

The Dow gained for the fifth straight session on Thursday, its longest winning streak this year. Additionally, the blue-chip index closed above the 17,000 mark for the first time since August. Meanwhile, the S&P 500 ended above the key technical level of 2000 for the first time since Aug 20. The index also closed above its 50-day moving average for the first time since Aug 18.

Benchmarks ended higher on Thursday as investors received further signs of dovishness in the minutes of the Federal Reserve's September policy meeting. The Federal Open Market Committee took the view that volatility in financial markets and concerns about China's economic slowdown compelled them to keep interest rates at near zero levels. Many Fed officials acknowledged the fact that these factors increased the downside risks to economic activity. They believe it will be a "prudent" decision to wait for more data to confirm the economy's growth.

Additionally, they want the inflation rate to move up to the desired target of 2% before raising rates. Some Fed voting members said their confidence that inflation will climb to 2% "had not increased" since the July meeting. Meanwhile, the Fed staff estimated inflation won't be able to touch the 2% goal even by the end of 2018.

Fed officials are also looking for further signs of improvement in labor market conditions before deciding on hiking interest rates. Most of them believe that a healthy labor market conditions have been met or will be met by 2015. Nevertheless, at the end of the voting, 9 out of 10 Fed members said that rates will remain steady in September, with the only exception being Richmond Fed President Jeffery Lacker.

Meanwhile, oil prices moved north yesterday. A weaker dollar and expectations about shrinking U.S. oil production levels boosted global oil prices. Prices of WTI and Brent crude oil gained 3.3% and 3.2% to $49.43 per barrel and $53.05 a barrel, respectively. Rise in oil prices had a positive impact on energy shares.

The Energy Select Sector SPDR (XLE) gained 1.9%, the highest among the S&P 500 sectors. Dow components Exxon Mobil Corporation ( XOM ) and Chevron Corporation ( CVX ) advanced 1.1% and 2%, respectively. Other key stocks from the energy sector including Schlumberger Limited ( SLB ), ConocoPhillips ( COP ) and Kinder Morgan, Inc. ( KMI ) increased 1.7%, 1.8% and 1.7%, respectively.

Separately, the Materials Select Sector SPDR ETF (XLB) advanced 1.4% and was the second biggest gainer 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 ) increased 0.6%, 1.4%, 2%, 1.6% and 1.3%, respectively. Overall, all 12 sectors of the S&P 500 ended in the green.

In economic news, the U.S Department of Labor reported that seasonally adjusted initial claims decreased 13,000 to 263,000 in the week ending Oct 3. The fall was more than the consensus estimate of initial claims decreasing to 272,500.

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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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