Stock Market News For May 26, 2016
Zacks Investment Research | May 25, 2016 10:10PM ET
Benchmarks finished in the green on Wednesday following strong rally in oil prices. Bigger-than-expected decline in U.S. crude inventories resulted in an oil price rally, which in turn boosted the energy and materials sector. Moreover, rising chances of a rate hike in June continued to help the financial sector register gains. Additionally, the S&P 500 registered its highest two day percentage increase since early March. 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 0.8%, or 145.46 points, to close at 17,851.51. The S&P 500 rose 0.7% to close at 2,090.54. The tech-laden Nasdaq Composite Index closed at 4,894.89, also gaining 0.7%. The fear-gauge CBOE Volatility Index (VIX) decreased 3.6% to settle at 13.90. A total of around 6.9 billion shares were traded on Wednesday, lower than the last 20-session average of 7.3 billion shares. Advancers outpaced declining stocks on the NYSE. For 66% stocks that advanced, 31% declined.
Oil prices increased after the U.S. Energy Information Administration (EIA) reported Wednesday that U.S. commercial crude oil inventories fell 4.2 million barrels to 537.1 million for the week ended May 20. Analysts had expected inventories to decrease between 2.5 million barrels and 3.3 million barrels. WTI crude increased 1.9% to $49.56 a barrel, settling at its highest level since Oct 9, 2015. Brent crude rose 2.3% to $49.74 per barrel.
Gains in oil prices boosted energy and materials stocks. The Energy Select Sector SPDR (XLE (NYSE:XLE)) rose 1.6% and was the biggest gainer in the S&P 500 sectors. Its key components, Transocean Ltd (NYSE:RIG). (CVX ) increased 0.7% and 1.6%, respectively.
Additionally, the Materials Select Sector SPDR ETF (XLB) advanced 1.2% and was the second highest advancer among the S&P 500 sectors. Key holdings from this sector including CF Industries Holdings (NYSE:CF), Inc. (AA ) increased 6.9%, 4.9%, 2.8%, 2.2%, 2% and 1.9%, respectively.
Further, increasing rate hike chances in June continued to boost the Financial Services Select Sector SPDR (XLFS), which also rose 1.2%. Top holdings from this sector such as Bank of America Corporation (NYSE:BAC) (GS ) increased 1.5% and 2.3%, respectively. The Financial Select Sector SPDR (XLF) increased 1.1%.
Meanwhile, rising rate hike concerns led the Utilities Select Sector SPDR (XLU) to fall 0.3% and become the only decliner among the S&P 500 sectors. Key utilities stocks including Exelon Corporation (NYSE:EXC) (ES ) decreased 0.3%, 2.7%, 0.7%, 0.3% and 0.7%, respectively.
According to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey, total mortgage application volume rose by a seasonally adjusted rate of 2.3% to 496.5 for the week ended May 20. It was preceded by a fall of 1.6% to 482.6. Meanwhile, data from Markit revealed that U.S. Services PMI declined from 52.8 in April to 51.2 in May.
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