Benchmarks gained marginally on Monday, boosted primarily by energy shares following a rise in U.S. oil prices which closed at a one-month high. The gains in energy shares offset some geopolitical turmoil including U.S. attack on Syrian air base last Thursday. Meanwhile investors remained focus on bank earnings set to begin later this week. Financials declined as investors expressed concerns over lofty valuations of equities and raised doubts over Trump's ability to implement his pro-growth policies.
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) gained 1.92 points to close at 20,658.02. The S&P 500 rose 0.1% to close at 2,357.16. The tech-laden Nasdaq Composite Index closed at 5,880.93, gaining 0.1%. The fear-gauge CBOE Volatility Index (VIX) gained 9.2% to settle at 14.05. A total of around 5.5 billion shares were traded on Monday, lower than the last 20-session average of 6.7 billion shares. Advancers outpaced declining stocks on the NYSE. For 31% stocks that declined, 65% advanced.
Energy Shares Gains Offset Geopolitical Concerns
Crude-oil prices ended at their highest level since early March on Monday, rising almost 10% over the last two weeks. A recent shutdown of Libya’s largest Sharara oil field and geopolitical concerns following the U.S. airstrike on Syria raised doubts over global crude supplies.
The recent cruise missile attack on Shayrat air base near Homs raised concerns of possible retaliation from leading oil producers Iran and Russia, allies of President Bashar al-Assad’s regime. Oil prices gained following expectations that such geopolitical concerns would lead to disruptions in Middle East output. Moreover, U.S. Secretary of State Rex Tillerson described the military strikes against Syria as a warning to other nations, including North Korea.
However, investors remained cautious on high U.S. crude inventories. WTI crude prices rose 84 cents, or 1.6%, to $53.08 a barrel. The rise in oil prices made a positive impact on the energy shares which outperformed all other major sectors of S&P 500.
The Energy Select Sector SPDR (XLE) rose 0.8%. Some of its key holding, including Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) both gained 0.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Financials Dragged Down by Banks
Investors raised doubts over Trump’s ability to implement pro-growth agenda including deregulation policies. Moreover, investors remained focus on market's lofty valuations. This had an adverse effect on investor confidence which had a negative impact on bank stocks.
The broader Financial Select Sector SPDR (XLF) declined 0.3%, dragged down primarily by bank stocks. Some of the key holdings of the financial sector in S&P 500 including JPMorgan Chase (JPM - Free Report) and Wells Fargo & Co (WFC - Free Report) declined by 0.4% and 0.6% respectively.
The Major Banks industry, of which JPMorgan, Wells Fargo and others are part, accounts for approximately 45% of the Financials sector’s total earnings. Earnings for the industry are expected to grow by only 0.2% for Q1. JPMorgan, Citigroup (C - Free Report) and Wells Fargo are expected to report their earnings on Thursday. Investors kept close watch on the earnings season as first quarter earnings report would help investors to judge about bank shares’ upside potential.
Meantime, St. Louis Federal Reserve President James Bullardsaid that Fed’s attempt to unwind balance sheet later this year would make do away with the Fed’s need to raise funds rate.
Stocks that made Headlines
Citi Trends’ Capital Plan Boosts Shareholder Returns
Clothing retailer, Citi Trends Inc. maintains its commitment to enhance shareholder value as it unveils an expanded capital return program. (Read More)
Newell Brands to Sell Pine Mountain & Diamond Business
Consumer goods behemoth, Newell Brands Inc. (NWL - Free Report) is smoothly progressing with plans on simplifying and strengthening portfolio. (Read More)
International Flavors Spurs Business with PowderPure Buyout
New York-based International Flavors & Fragrances Inc. (IFF - Free Report) recently announced that, on Apr 7, it acquired Oregon-based Columbia Phytotechnology LLC (also known as PowderPure). (Read More)
Qualcomm Counter Attacks Apple on its Allegations
Qualcomm Inc. (QCOM - Free Report) , the largest mobile chipset manufacturer using baseband technology globally, has counter attacked tech giant Apple Inc. (AAPL - Free Report) in relation to the last $1 billion lawsuit filed by the latter in the U.S. District Court for the Southern District of California in Jan 2017. (Read More)
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