U.S. stocks are higher this morning, following three straight days of losses despite oil prices hovering around 7-year lows and as investors anxiously await a rate hike decision by the U.S. Federal Reserve.
By Paolo Palazzi-Xirinachs
Thursday, December 10, 2015
Energy shares lead gains on today as Chevron Corp. and Exxon Mobil Corp. surged at least 2%. Industrials also advanced as airline stocks climbed. This morning, advancing issues outnumbered decliners on the NYSE by 1,660 to 1,006. On the Nasdaq, 1,364 issues rose and 877 fell. The S&P 500 index showed 1 new 52-week high and 4 new lows, while the Nasdaq recorded 10 new highs and 34 new lows. Global markets have had a bruising week so far as equities have tracked oil prices.
Brent futures are down more than 6% this week and having dipped below $40 per barrel there are renewed expectations it might test 2008's low. Benchmark Brent crude dropped to a six-year low in London this week after OPEC effectively scrapped its output ceiling at a Dec. 4 meeting as de facto leader Saudi Arabia stuck to a policy of squeezing out rival producers. Members can pump as much as they please, despite a global surplus, Iran’s Oil Minister Bijan Namdar Zanganeh said after the conference. Brent futures traded near $40 a barrel in London today. Non-OPEC supply will fall by 380,000 barrels a day next year -- compared with a 130,000-barrel drop projected last month -- to average 57.14 million a day, the organization said Thursday in its monthly report. An expected contraction in the U.S. will account for roughly half the decline, the group said. It increased estimates for non-OPEC supply in 2015 by 280,000 barrels a day.
"The market will continue to watch oil carefully and we can expect a mixed to positive session if we don't see any wild swings in oil prices like we did yesterday," said Peter Cardillo, chief market economist at First Standard Financial in New York to Reuters. "Investors are awaiting Fed's decision, and there has been some portfolio repositioning ahead of the meeting and that's one reason the market has been erratic." The central bank meets on Dec. 15-16, where it is finally expected to raise rates for the first time in nearly a decade. According to the CME Group’s FedWatch, traders are pricing in an 85% chance of a rate hike next week.
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