Daily Stock Market Update — Tuesday, Dec. 18
U.S. stocks are broadly higher and energy companies are falling after the price of crude oil plunged another 7 percent, and more in Tuesday’s Stock Market Update. The market gave up an early gain following two steep losses. The Dow Jones Industrial Average lost 1,004 points over the previous two days.
Health care companies and household goods makers took some of the biggest losses in afternoon trading, while banks fell again as interest rates headed lower.
Investors are waiting to hear from the Federal Reserve, which begins a two-day meeting on interest rates. Most economists expect it to raise short-term rates by another quarter of a percentage point, but investors hope that it will signal a slower pace of increases ahead.
STOCK MARKET UPDATE
KEEPING SCORE: The S&P 500 index remained unchanged at 2,546 by closing time. On Monday it closed at its lowest since October 2017 amid worries about slowing economic growth, higher interest and global trade tensions.
The Dow rose 82 points, or 0.4 percent, to 23,675. It was up as much as 334 earlier. The Nasdaq composite rose 30 points, or 0.5 percent, to 6,783.
The Russell 2000 index of smaller companies rose 4 points, or 0.3 percent, to 1,382. The index is still 20 percent below the peak it set in August, meaning it’s in what Wall Street calls a “bear market.”
THE QUOTE: There haven’t been any big developments in U.S.-China trade talks since the beginning of this month. JJ Kinahan, chief markets strategist for TD Ameritrade, said investors are confused about the state of the trade dispute and are reluctant to commit to stocks, while businesses aren’t spending.
“We don’t know the rules of the game,” he said. “People can’t plan. When you can’t plan, you’re not anxious to buy stocks.”
CRUDE AWAKENING: The price of oil continued to tumble and is at its lowest since August 2017. Benchmark U.S. crude plunged 7.3 percent to $46.24 a barrel in New York. Brent crude, used to price international oils, sank 5.6 percent to $56.26 a barrel in London.
Crude oil has plunged by more than one-third since early October as traders worried about a slowdown in the global economy and an increase in supply. Both would hurt prices. While OPEC and several other countries recently agreed to cut production of oil in 2019, it was unclear if the cut is large enough to balance supply and demand.
“They’re not the only game in town anymore,” Kinahan said of OPEC. He said rising oil production in the U.S. and a combination of alternative fuels and greater efficiency by businesses has reduced OPEC’s ability to sway the oil market.
On Tuesday, the Energy Information Administration said U.S. shale oil production will keep climbing in January, and the Wall Street Journal reported that oil production in Russia reached a record high in December.
FED MEETING: Most economists expect the Fed to raise its short-term interest rate Wednesday afternoon. While investors expect rates to go up, they also hope that Fed Chairman Jerome Powell will signal that the Fed is pausing its campaign of rate hikes. The Fed’s rates help set borrowing costs for various types of loans. Higher rates can slow economic growth, something investors are already worrying about, and make stocks look relatively less attractive.
TAKING OFF: Aerospace company Boeing surged to one of the market’s biggest gains after it raised its dividend 20 percent and increased its stock buyback program to $20 billion. Boeing’s stock has struggled recently on worries that the global trade war will hit its profits particularly hard.
Boeing rose 4 percent to $328.85. The stock is down 16 percent since early October.
Several other companies that have recently suffered big losses also said they will buy back more stock. Those included health care products giant Johnson & Johnson and insurer Allstate.
DELUXE APARTMENT IN THE SKY: The Commerce Department said developers broke ground on more apartments in November, and homebuilders climbed. Lennar gained 2.2 percent to $40.90 and NVR added 1.3 percent to $2,485. The companies have taken huge losses this year as rising mortgage rates and prices have reduced home sales.
Real estate investment trusts also rose Tuesday. Apartment building owner AvalonBay Communities gained 1.6 percent to $182.76 and CBRE Group rose 4.7 percent to $41.30. Real estate companies had taken sharp losses Monday.
OVERSEAS STOCK MARKET UPDATE: Germany’s DAX lost 0.3 percent, while Britain’s FTSE 100 shed 1.1 percent and France’s CAC 40 dripped 1 percent lower.
Losses were more severe in Asia. The Nikkei 225 in Japan lost 1.8 percent, the Hang Seng in Hong Kong dropped 1 percent and South Korea’s Kospi slipped 0.4 percent.
OTHER COMMODITIES: Wholesale gasoline fell 4.2 percent to $1.35 a gallon and heating oil lost 4 percent to $1.75 a gallon. Natural gas jumped 8.8 percent to $3.84 per 1,000 cubic feet.
Gold inched up 0.1 percent to $1,253.30 an ounce. Silver fell 0.4 percent to $1470 an ounce. Copper skidded 3.3 percent to $2.66 a pound.
BONDS: Bond prices rose again. The yield on the 10-year Treasury dipped to 2.82 percent from 2.85 percent late Monday.
CURRENCIES: The dollar dipped to 112.50 Japanese yen from 112.75 yen late Monday. The euro rose to $1.1365 from $1.1350, and the British pound rose to $1.2647 from $1.2629.
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