Benchmarks finished mixed on Wednesday as decline in utilities and telecommunications offset energy’s gain. Investors expect the Fed to raise benchmark U.S. interest rates at its December meeting. Dividend payers like utilities and telecom fell as rise in rates dragged bond prices lower, while U.S. bond yields jumped. Energy shares, on the other hand, climbed due to surge in oil prices. OPEC’s production cut decision helped oil prices gain traction. Meantime, all the three major indexes ended with big gains for November thanks to a sharp post-election rally.
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 a meagre 0.01%, to close at 19,123.58. The S&P 500 declined 0.3% to close at 2,198.81. The tech-laden Nasdaq Composite Index closed at 5,323.68, decreasing 1.1%. The fear-gauge CBOE Volatility Index (VIX) advanced 2.6% to settle at 13.24. A total of around 9.5 billion shares were traded on Wednesday, higher than the last 20-session average of 7.9 billion shares.
Dividend Payers Decline, Energy Rises
Possibility of a rate hike this month had a negative impact on dividend payers like utilities and telecommunications companies. The Utilities Select Sector SPDR (XLU) declined 3.2%, while shares of AT&T Inc. (T - Free Report) fell 2.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Rise in oil prices, meantime, had a positive impact on energy shares. Oil prices leaped as OPEC confronted its skeptics by agreeing to its first production cut in eight years on Nov 30. OPEC overcame disagreements between the group’s largest producers, Saudi Arabia, Iran and Iraq, by agreeing to trim output by about 1.2 million barrels a day by Jan 2017.
According to the Wall Street Journal, a production cut of this size could “push oil supplies below demand levels sooner than expected”. The WTI and Brent crude surged 8.52% and 8.10% to $49.44 per barrel and $46.38 a barrel, respectively, while the Energy Select Sector SPDR (XLE) jumped 4.8% (read more: OPEC Has Finally Agreed to Cut Output, Sending Oil Up 7%).
For November, the Dow rose 5.4%, its best monthly gain since March, while the S&P 500 was up 3.4% and the Nasdaq was up 2.6%. President-elect Donald Trump has proposed a raft of fiscal-stimulus measures, which has pushed the S&P 500 to almost an all-time high in November. OPEC’s decision to cut oil production for the first time since 2008 also added to the euphoria, while holiday season sales gained ground.
Amid all these, solid economic data from consumer confidence level, housing starts to GDP bolstered investors’ sentiment. Third quarter earnings results too came in good, with total earnings of 476 S&P 500 members reported in the third quarter were up 4% from the same period last year on 2.6% higher revenues, with 73.1% beating EPS estimates and 55.5% surpassing revenue expectations.
Stocks That Made Headlines
PVH Corp. Tops Q3 Earnings & Sales, Raises Outlook
Keeping its positive earnings surprise trend alive for the tenth straight time, PVH Corporation (PVH - Free Report) posted yet another quarter of superb results in third-quarter fiscal 2016. (Read More)
GE Completes Strategic Divestiture of Interbanca Business
General Electric Company (GE - Free Report) has outperformed the Zacks categorized Diversified Operations industry with an average return of 8% compared with 7.1% for the latter, over a period of 30 days. (Read More)
Zacks' Best Investment Ideas for Long-Term Profit
Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>