We headed into yesterday’s opening bell with European equity markets under significant pressure due to the downing of a Russian fighter over Turkey. However, that pressure failed to prevent the markets from attracting a bid and gaining a degree of equilibrium in the early afternoon. Markets closed with modest gains across the board in fact. The S&P 500 (+0.13%) and Dow Industrials (+0.12%) and NASDAQ (0.01%) shook off the weak start. Volume was unexpectedly strong on both the NYSE (+8.11%) and NASDAQ (+16.97%).
There are times in market cycles when strength in a given sector or broadly speaking is the result of a theme that is strikingly negative from a non supply/demand perspective. Yesterday’s rally in crude is a classic case in point. In fact energy was the trigger than enabled the broader market to recover from its early morning weakness. The rally in energy/crude was triggered primarily over supply concerns as a result of the turmoil in the Middle East. Crude has also been the beneficiary of support this week as a result of expectations that OPEC may at some point soon adjust or tighten production in an effort to prevent crude from collapsing from the precarious hold it has on $40.00/bbl. Those two factors have given some lift to WTI crude and Brent with both closing significantly higher yesterday. WTI closed at $42.51/bbl and Brent closed at $45.74/bbl.
From a sector standpoint, energy was the out performer on the day, gaining 1.70%. Otherwise, no sector of the market gained or lost more than one percent on the day. From an economic data standpoint, the Case-Shiller HPI housing data came in better than expected. Both the 20-city SA – M/M (+0.6%) and the 20-city NSA Yr/Yr (+5.5%) were stronger than consensus expectations. Consumer Confidence slipped modestly and GDP was revised higher.
Net/net. markets welcomed the data albeit with little in the way of fanfare.
Photo: flickr KE-TA