Stock Market News For September 29, 2016
Zacks Investment Research | Sep 28, 2016 10:05PM ET
Benchmarks ended in the green on Wednesday mostly led by gains in energy shares. Rally in oil prices boosted energy shares. The Organization of the Petroleum Exporting Countries (OPEC) reached a preliminary accord to curb oil production, pushing oil prices higher. A weekly decline in U.S. crude supply also helped oil prices gain traction.
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 0.6% or 110.94 points to close at 18,339.24. The S&P 500 advanced 0.5% to close at 2,171.37. The tech-laden Nasdaq Composite Index closed at 5,318.55, increasing 0.2%. The fear-gauge CBOE Volatility Index (VIX) dropped 5.1% to settle at 12.43. A total of around 7.1 billion shares were traded on Wednesday, just above the last 20-session average of 7 billion. Advancers outpaced declining stocks on the NYSE. For 74% stocks that advanced, 24% declined.
OPEC Agrees to Cut Oil Output
After a six hour gathering in the Algerian capital on Wednesday, members of the OPEC agreed that they needed to curb crude output. Such an agreement was concluded for the first time since 2008, aiming to address concerns regarding a supply glut. OPEC officials decided that a committee will be formed to determine how much output each country would have to cut.A report regarding these levels will be presented in the group’s next meeting to be held in November.
Most of the major oil producers in OPEC have been pumping oil close to maximum capacity in recent times. They were competing among themselves for buyers. Iran’s commitment to boost production was a major hindrance, especially, when Saudi Arabia refused to sign any production curbs unless Iran does so. Nevertheless, an exceptional decision was made, with the group proposing to cut its collective output to between 32.5 million barrels per day (bpd) and 33 million bpd, down from August’s figure of 33.2 million bpd.
Crude Oil Spikes, Energy Shares Rise
Along with OPEC’s decision to cap crude-oil output, drop in domestic crude supply also pushed oil prices up. According to the Energy Information Administration, U.S. crude production edged down by 15,000 bpd to 8.497 million bpd for the week ending Sep 23. Crude inventories also fell by 1.9 million barrels last week. The WTI and Brent crude gained 5.1% and 5.6% to $47.05 per barrel and $48.69 a barrel, respectively (read more: Crude Oil Spikes 4.8% on OPEC Agreement to Cut Oil Output ).
Rise in oil prices propelled energy shares higher. The Energy Select Sector SPDR (XLE (NYSE:XLE)) gained 4.3%, the highest gainer among the S&P 500 sectors. The energy sector also posted its largest gain since Jan 14. Dow components such as Chevron Corporation (NYSE:CVX) ( the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Durable Goods Orders Remains Unchanged
Orders for durable goods in the U.S. were little changed in August, while shipments of capital equipment declined for the fourth straight month indicating weakness in the manufacturing sector. The consensus had expected durable orders to decline by 1.2%.
Excluding transportation, orders dropped 0.4% last month. Demand declined for heavy machinery, computers and electrical equipment. Shipments for core capital goods, a category used to help determine gross domestic product, fell 0.4%.
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