Benchmarks closed mostly in the green on Tuesday following gains in energy stocks. Continued rally in oil prices boosted the energy sector, which in turn helped the S&P 500 to reach its highest settlement since July 22. While rise in oil prices also pushed the Dow to finish in positive territory, the Nasdaq ended in the red following losses in biotech stocks.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) increased 0.1%, to close at 17,938.28. The S&P 500 also rose 0.1% to close at 2,112.13. However, the tech-laden Nasdaq Composite Index closed at 4,961.75, losing 0.1%. However, the fear-gauge CBOE Volatility Index (VIX) increased 2.9% to settle at 14.05. A total of around 6.4 billion shares were traded on Tuesday, lower than the last 20-session average of 6.9 billion shares. Advancers outpaced declining stocks on the NYSE. For 61% stocks that advanced, 36% declined.
Oil prices increased yesterday following continued global production disruptions and weaker dollar. Militant attacks on oil pipeline in Nigeria resulted in a decline in its crude output. Also, the Energy Information Administration said that the U.S. crude output slumped by 250,000 barrels a day last month, positing its biggest one-month fall in several years.
Further, the U.S. dollar weakened following uncertainty over when the Fed might raise rate. The U.S. dollar index was down 0.4% with the euro came nearly at $1.136 and the yen was about 107.3 yen against the U.S. dollar. WTI crude increased 1.3% to $50.36 a barrel, crossing the $50 per barrel mark for the first time since July 21. Brent crude rose 1.7% to $51.44 per barrel, reaching its highest settlement since Oct 9.
Increase in oil prices led the Energy Select Sector SPDR (XLE) to increase 2.3% and become the biggest gainer among the S&P 500 sectors. Key energy stocks including, EOG Resources, Inc. (EOG - Free Report) , ConocoPhillips (COP - Free Report) , Pioneer Natural Resources Co. (PXD - Free Report) , Halliburton Company (HAL - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) advanced 5.1%, 4.4%, 2.9%, 2.7% and 1.9%, respectively. Dow components Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) increased 1.5% and 2.1%, respectively.
Meanwhile, the Fed Chairwoman Janet Yellen’s comments on Monday continued to have a positive impact on key indexes even yesterday. Yellen said that most of the U.S. economic data had been encouraging. She also said that although last month’s employment growth was “disappointing,” overall domestic labor market data was favorable. Yellen indicated that Fed will increase rate this year, but refrained from giving the exact timing for rate hikes.
In company news, shares of Biogen Inc. (BIIB - Free Report) plunged 12.8% after the company’s Phase 2 study of its treatment for relapsing multiple sclerosis failed to meet its primary and secondary endpoints. Also, Alexion Pharmaceuticals, Inc’s (ALXN - Free Report) shares slumped 10.9% after the company announced disappointing top-line data. As per the data its drug eculizumab failed to meet the primary efficacy endpoint in a phase III study (REGAIN) in patients suffering from refractory generalized myasthenia gravis (gMG).
Losses in Biogen and Alexion Pharmaceuticals led the NASDAQ Biotechnology Index (NBI) to slump 2.5%, registering its worst percentage fall since May 11. Also, the iShares Nasdaq Biotechnology (IBB) fell 2.6%.
Key stocks from the bio-tech sector including Vertex Pharmaceuticals Incorporated (VRTX - Free Report) , Illumina Inc. (ILMN - Free Report) , Amgen Inc. (AMGN - Free Report) , Regeneron Pharmaceuticals, Inc. (REGN) and Juno Therapeutics Inc. (JUNO) fell 1.4%, 1.8%, 0.8%, 2.3% and 0.5%, respectively. Decline in biotech sector led the Health Care Select Sector SPDR (XLV) to decline by 0.6% and become the biggest loser among the S&P 500 sectors.
In economic news, as per the Bureau of Labor Statistics, non-farm business sector labor productivity fell 0.6% in the first quarter of 2016, but was narrower than 1% decline expected earlier.
Additionally, the Board of Governors of the Federal Reserve System reported that consumer credit increased by $13.4 billion in April, following March’s $28.4 billion increase. Consumer credit increased at a seasonally adjusted annual rate of 4.5% in April. However, it came short of March’s 9.6% increase.