Wednesday March 9th

9-03-2016

Stocks higher as oil rises

U.S. stocks traded higher Wednesday as oil prices rose and investors awaited the outcome of Thursday's European Central Bank meeting. Oil prices rose, with U.S. crude oil futures up more than 1.5 percent above $37 a barrel. Producers in and outside OPEC plan to meet in Moscow on March 20 to discuss an output freeze, an Iraqi oil official told state newspaper Al-Sabah. Weekly oil inventories are due later in the morning. Peter Boockvar, chief market analyst at The Lindsey Group, also noted support from gains in European stocks ahead of the ECB meeting. ECB President Mario Draghi is expected to announce more stimulative measures, with hopes of expansion of the asset purchase program and a possible further cut to the already negative deposit rate. The Federal Reserve and Bank of Japan are due to hold meetings next week. "I think what we've seen over the past month is a bear market rally and what we hear from central bankers over the next week could mark the end of that," Boockvar said. The U.S. dollar index traded higher, while the euro was at $1.09. Gold fell sharply to trade near its lowest in almost a week. Treasury yields were higher, with the 2-year at 0.89 percent and the 10-year at 1.87 percent as of 9:35 a.m. ET. Dow futures briefly gained 100 points ahead of the open, following a lower close Tuesday that broke a five-day winning streak. The S&P 500 and Nasdaq composite both fell more than 1 percent. "The relief rally is persistent and reflects improved intermediate-term momentum. However, we would be wary of a loss of short-term momentum given widespread short-term overbought conditions," BTIG Chief Technical Strategist Katie Stockton said in a note. Wednesday also marks the seventh anniversary of the bull market and the S&P 500 is up 193 percent since the close on March 9, 2009. In economic news, weekly mortgage application volume increased 0.2 percent on a seasonally adjusted basis, according to the Mortgage Bankers Association. Wholesale trade data is due later in the morning. The Treasury is scheduled to hold a 10-year note auction in the afternoon. European stocks traded about 1 percent higher, with the STOXX Europe 600 Banks index outperforming with gains of 1.4 percent in morning trade ET. Asian stocks closed mostly lower, with the Shanghai composite off about 1.3 percent and the Nikkei 225 0.8 percent lower. In morning trade, the Dow Jones industrial average gained 57 points, or 0.34 percent, to 17,022, with Chevron leading all constituents higher except Nike. The S&P 500 traded up 8 points, or 0.40 percent, to 1,987, with energy leading all 10 sectors higher. The Nasdaq composite rose 16 points, or 0.35 percent, to 4,664. About five stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 33 million and a composite volume of 74 million. Oil prices broke above $40 a barrel on Wednesday, driven by anticipation that the world's largest exporters may agree as soon as this month to freeze output. Producers in and outside the Organization of the Petroleum Exporting Countries plan to meet in Moscow on March 20 to discuss an output freeze, an Iraqi oil official told state newspaper Al-Sabah. Russia's energy ministry said no date or place had been set for a possible meeting, but this had little impact on the oil market. Brent crude futures rose 78 cents to $40.43 a barrel by 9:41 a.m. ET (1341 GMT), having touched three-month highs on Tuesday above $41, while U.S. crude futures were up 69 cents at $37.19. The price of gold fell on Wednesday as equities climbed and expectations for further monetary easing from the European Central Bank drove down the euro, prompting some investors to take profits after the metal's rally to 13-month highs. Outflows were seen from bullion-based exchange-traded funds after hefty inflows earlier in the year. The largest, SPDR Gold Shares, said its holdings fell 2.4 tonnes on Tuesday, their biggest outflow in nearly four weeks. Spot gold was at $1,245.26 an ounce, down 1.23 percent. U.S. gold futures for April delivery were down 1.35 percent at $1,245.90 an ounce, after dipping near 1-week lows.