Benchmarks finished in the green on Wednesday, propelled upwards by higher oil prices. Shares of the energy sector jumped as the price of oil increased on speculation that the U.S. is closer to a military attack on Syria. This helped major indices rebound from two consecutive days of losses. On the home front, pending home sales declined for the month of July. Consumer staples was the biggest loser among the S&P 500 industry groups.
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The Dow Jones Industrial Average (DJI) gained 0.3% to close the day at 14824.51. The S&P 500 added 0.3% to finish yesterday’s trading session at 1634.96. The tech-laden Nasdaq Composite Index increased 0.4% to end at 3593.35. The fear-gauge CBOE Volatility Index (VIX) declined 1.7% to settle at 16.49. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 4.19 billion shares, well below 2013’s average of 6.31 billion shares. Advancing stocks outnumbered the decliners. For 53% shares that advanced, 44% declined.
Benchmarks took a breather yesterday following two consecutive days of losses. On Monday and Tuesday stocks declined as investor sentiment was dampened because of the increasing possibility of a US military strike on Syria. Major economies such as Britain, France, Canada and the Arab League have backed the U.S. to give a strong reply to the Syrian government. Adding to investor woes, Russia is backing Syria.
Investors have a perception that if U.S attacks Syria then the supply of oil from the Middle East may be affected. This pushed oil prices to their highest level in nearly two years. This is because the Middle East has half of the oil reserves of the world. These concerns have pushed oil prices higher and the French bank Societe Generale said Brent crude oil prices may jump to $150 if supply of oil is interrupted.
On the home front, the National Association of Realtors posted pending home sales numbers. According to the report, pending home sales index for the month of July fell 1.3% to 109.5 from June’s figure of 110.9. July’s fall was above the consensus estimate of a fall of 1%. Pending home sales index in the northeast fell 6.5% and declined 2.6% in the south. NAR chief economist Lawrence Yun, said: “The modest decline in sales is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown. However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West.”
On the earnings front, Joy Global Inc. (NYSE:JOY) reported fiscal third quarter results. Earnings for the Mining equipment manufacturer declined 5.3% but beat the Street’s estimates. The company cautioned of lower revenue. Shares declined 4.7% following the announcement of results.
The energy sector was the biggest gainer among the S&P 500 industry groups following the increase in oil prices. The Energy Select Sector SPDR (XLE) gained 1.7% yesterday. Stocks such as Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), Hess Corp. (NYSE:HES), Murphy Oil Corporation (NYSE:MUR) and ConocoPhillips (NYSE:COP) added 2.5%, 2.3%, 1.4%, 1.0% and 1.1%, respectively.
Consumer staples stocks were the worst performers among the S&P 500 industry groups. The Consumer Staples Select Sect. SPDR (XLP) lost 1.2%. Stocks such as The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), Philip Morris International Inc. (NYSE:PM), Wal-Mart Stores, Inc. (NYSE:WMT) and and Altria Group Inc (NYSE:MO) slipped 1.4%, 0.6%, 1.4%, 0.7% and 1.2%, respectively.