- 16 августа 2016, 17:10
- Zacks Investment Research
Benchmarks closed at record highs on Monday, boosted by gains in energy and material shares. Commodity-linked shares moved north as crude hit one month high on expectations that top oil producers will cap output. An upbeat housing market gauge too boosted investors’ sentiment. Monday’s gain helped the Dow, the S&P 500 and the Nasdaq to end at all-time highs for the second time in less than a week.
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The Dow Jones Industrial Average (DJI) increased 0.3%, to close at 18,636.05. The S&P 500 also advanced 0.3% to close at 2,190.15. The tech-laden Nasdaq Composite Index closed at 5,262.02, gaining 0.6%. The fear-gauge CBOE Volatility Index (VIX) rose 4.5% to settle at 12.07. This gauge of fear in the market had traded near multi-year lows, last week. A total of around 3 billion shares were traded on Monday on the NYSE. Advancers outpaced declining stocks on the NYSE. For 63% stocks that advanced, 35% declined.
Hopes that the prolonged rout in oil prices will lead to a production freeze helped oil prices to gain on Monday. Russian Energy Minister Alexander Novak said that his country is in consultation with Saudi Arabia and other oil producing nations to achieve stability in the oil market. His comments came in after Saudi Arabia’s Energy Minister Kahlid al-Falih showed willingness to talk with major crude-oil producers to limit oil production, last week.
Both Russia and Saudi Arabia are the largest oil exporters in the world and increased speculation that they will consider a collective production cap pushed WTI crude to settle at $45.74 a barrel, up 2.8%. This was WTI crude’s highest settlement price since July 15. Brent crude also rose 2.9% to $48.35 per barrel. Both the WTI and Brent gained almost 10% over a three-session winning streak on Monday, their best three-session rally in four months.
Sharp uptick in oil prices, boosted energy and materials sectors. The Energy Select Sector SPDR (XLE) gained 0.8%, the second highest among the S&P 500 sectors. Key stocks from the sector including Chesapeake Energy Corporation (CHK), Devon Energy Corporation (DVN), Williams Companies, Inc. (WMB) and Marathon Oil Corporation (MRO) increased 9.8%, 0.7%, 1.5% and 1.3%, respectively. Dow components Chevron Corporation (CVX) increased 0.6%, while Exxon Mobil Corporation (XOM) also eked out gains.
The Materials Select Sector SPDR ETF (XLB) increased 1% and was the biggest gainer among the S&P 500 sectors. Key components from materials sector including CF Industries Holdings, Inc. (CF), Owens-Illinois, Inc. (OI), Freeport-McMoRan Inc. (FCX), Nucor Corporation (NUE) and LyondellBasell Industries N.V. (LYB) rose 3.8%, 1.8%, 3.1%, 1.8% and 2.9%, respectively. Dow components E. I. du Pont de Nemours and Company (DD) and Caterpillar Inc. (CAT) gained 1.5% and 1.4%, respectively.
On the economic front, builders’ morale improved this month, which gives hopes for more construction. The NAHB/Wells Fargo Housing Market Index increased 2 points to 60 in August from a downwardly revised 58 in July. Any reading over 50 signals expansion. Meantime, the current sales conditions rose 2 points to 65, while the index of expected conditions increased 1 point to 67.
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