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Wall St shares extend gains post-Fed, oil stocks rise

Thursday, September 22, 2016 8:57
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(Before It's News)

US stocks extended gains on Thursday as a dovish Fred stance buoyed markets and weaker home sales fuelled the view that a rate hike may be further away, while oil stocks dominated the gainers after energy supply eased, data showed.

The S&P 500 index was up 0.7% at 2178 and led by Transcocean Inc (NYSE:RIG) up 4.9% to $9.59. Other top gainers were Freeport-Mcmoran Inc (NYSE:FCX) up 4.5% at $11.01 and Murphy Oil Corp (NYSE:MUR) up 3.9% to $27.43

Crude prices rallied after data released by the U.S. Energy Information Administration Wednesday showed a bigger-than-expected 6.2-million barrel drawdown in domestic crude stockpiles for the week ended Sept. 16. At 504.6 million barrels, crude inventories were the lowest since Feb. 12, but still 11% above year-ago levels, the EIA said.

The US oil benchmark WTI was up 2.3% at $46.37.

The S&P Midcap 400 was up 0.9% at 1559 and led by Denbury Resources (NYSE:DNR), up 6.5% to $2.95.

Meanwhile, the S&P Smallcap 600 was up 0.9% to 759 and led by Lumber Liquidators Holdings Inc (NYSE:LL) up 6.4% to $18.17.

The Federal Reserve left rates on hold on Thursday but warned that the case for a hike was intensifying and action would be taken if data continued to support the case.

To that end, Thursday’s data did not support the case. Sales of previously-owned US homes unexpectedly fell in August for the second month in a row as rising prices and tight inventories held buyers back.

Existing home sales fell by 0.9% in August from the month prior to an annualised rate of 5.33mln units, according to the National Association of Realtors, compared with expectations of a 1.1% rise. That came on the back of a 3.4% fall in July, and brings the rate down to the lowest level since February.


Wall Street was tipped to rise in early trading on Thursday as markets welcomed Wednesday’s decision by the Federal Reserve to sit tight on US interest rates.

The Dow Jones Industrial Average was expected to gain 0.4% after the opening bell, leaving it above 18,350 for the first time since early September.

The Fed kept rates and policy unchanged at September’s meeting but it was a split decision, with three committee members voting for a hike before the end of the year.

PhillipCapital UK market economist Ana Thaker said the difference of opinion amongst committee members would make for an interesting end to the year.

“We are likely to now get even more mixed messages from the Fed, leaving markets even more confused about what to expect,” she said.

“The FOMC voting pattern seen yesterday is a far cry from a generally united committee we have seen under the leadership of Yellen and looks to be a turning point for the monetary policy in the US.”

The Fed decision was anticipated to dominate sentiment, with jobless claims and existing home sales figures thought unlikely to spring any surprises.

Oil continued a breakout as EIA crude inventories confirmed Tuesday’s API data showing a 7.5m barrel drawdown, raising hopes that a supply glut was easing.

The price of a barrel of Brent crude rose 1.7% to US$47.63 while a barrel of US light crude ticked up nearly 2% to US$46.26.

In corporate news, Apple Inc (NASDAQ:AAPL) reportedly approached Formula One racing outfit McLaren about an investment or potential takeover.

McLaren said it was not in talks with the tech giant, but said it regularly talked to a wide range of parties.

Story by ProactiveInvestors

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