By Ellie Ismailidou and Sara Sjolin, MarketWatch
China's surprise cash injection fails to boost markets
U.S. stocks switched between small gains and losses Tuesday
morning, as investors took in stronger-than-expected auto-sales
data while still dealing with the aftershocks of Monday's
China-inspired global stock selloff.
All three indexes opened slightly higher but turned slightly
negative in morning trade. The S&P 500 was down 5 points or
less than 0.1%, at 2,008, pulled down by a 0.7% drop in energy
companies shares. The only two sectors on the index in positive
territory was the health-care sector, up 0.6%, and consumer
staples, up 0.2%.
The Dow Jones Industrial Average fell 48 points, or 0.3%, to
17,100. The Nasdaq Composite lost 3 points or less than 0.1%, to
4,901.
Car sales were on track for their best-selling month of the year
(http://www.marketwatch.com/story/us-car-sales-poised-for-best-year-ever-2016-01-05)
and their best December ever as companies reported their sales.
New-car revenue is expected to reach a record
(http://www.marketwatch.com/story/december-us-new-vehicle-revenue-seen-reaching-record-high-2016-01-05)
$58 billion for December, up 15.4% from a year earlier.
Meanwhile, a surprise cash injection from China's central bank
()into the country's financial system helped stabilize Asian
markets somewhat but failed to give global equities a sustained
boost. Asian markets remained choppy, with the Shanghai Composite
Index swinging in and out of losses before closing 0.3% lower
(http://www.marketwatch.com/story/asian-markets-steady-as-china-moves-to-calm-nerves-2016-01-04).
"Investors are working through a lot of conflicting things,"
said Kim Forrest, senior portfolio manager at Fort Pitt
Capital.
On one hand, strong auto sales "were pretty much the bright spot
last year...and we anticipate that, given the easy credit and the
age of the fleet in the U.S., there will still be demand for new
cars next year," Forrest said.
On the other hand, investors are still trying to figure out what
weak Chinese economic data mean for U.S. growth, particularly since
"many of the companies that most excited investors in the last
couple of years, such as Apple (AAPL), had some element of China in
them," she said.
On Monday, all three benchmarks posted steep losses, with the
S&P 500 marking the worst start to a new year
(http://www.marketwatch.com/story/dow-industrials-hasnt-started-the-year-this-horribly-in-84-years-2016-01-04)
in more than a decade. The moves in the U.S. came after a
significant fall in Chinese stocks prompted a halt to trading,
sparking a selloff in global equities.
"Investors are bracing themselves for more wild swings given the
uncertain global outlook for economic growth and interest rates,"
said David Papier, sales trading team leader, at ETX Capital, in a
note.
But the focus is shifting from economic data to the end of the
ban on selling by large shareholders on the Shenzhen
exchange--scheduled to expire on Friday--which could exacerbate the
weakness, said Colin Cieszynski, chief market strategist at CMC
Markets, in a note.
Read: These 12 market calls of 2015 have one lesson for turmoil
in 2016
(http://www.marketwatch.com/story/these-12-market-calls-of-2015-have-one-lesson-for-investors-2015-12-31)
Meanwhile, gun stocks rallied
(http://www.marketwatch.com/story/gun-stocks-rally-as-obama-outlines-new-measures-2016-01-05)for
a second day, as investors bet that new restrictions to be rolled
out by President Barack Obama not only wouldn't deter sales but
would propel them. Smith & Wesson (SWHC) shares surged 11%
after the opening bell and Sturm, Ruger & Co. (RGR) climbed
7.6%.
Oil companies were under selling pressure on the back of
continued weak oil prices . Transocean Ltd. (RIG) slumped 4.4%,
Schlumberger Ltd. (SLB) fell 0.7%, and Exxon Mobil Corp. (XOM) lost
0.5%.
Other markets: European stocks were higher
(http://www.marketwatch.com/story/european-stocks-waver-after-china-led-market-carnage-2016-01-05).
U.K. stocks , were boosted by mining shares
(http://www.marketwatch.com/story/uk-stocks-rebound-after-worst-day-in-three-months-2016-01-05),
lifted by higher metals prices.
Gold inched 0.4% higher after settling at its highest level in
more than a week
(http://www.marketwatch.com/story/gold-draws-haven-bids-amid-china-middle-east-worries-2016-01-04)
on Monday as tensions in the Middle East spurred haven demand.
Treasury yields continued to decline for a fourth straight session,
as global stock-market jitters fueled demand for investors
perceived as safe, namely government debt.
Crude-oil prices turned lower
(http://www.marketwatch.com/story/oil-prices-reverse-gains-as-supply-worries-weigh-2016-01-05),
while the dollar rose against most other major currencies.
Data: In a quiet day on the economic front, the main data were
monthly car sales for December.
There are no Federal Reserve speakers on the docket. Investors
instead are focusing on the release Wednesday of minutes from the
Fed's Dec. 16-17 meeting, when it raised interest rates for the
first in almost a decade.
Movers: Among individual car companies, Fiat Chrysler (FCA.MI)
reported a 13% increase in car sales for the month, marking the
best December for the company in 90 years
(http://www.marketwatch.com/story/fiat-chrysler-reports-best-december-sales-in-90-years-2016-01-05).
Meanwhile, Ford (F) sales rose 5% in 2015, to mark its best year
since 2006.
FLIR Systems Inc. (FLIR) shares jumped 6% after Goldman Sachs
upgraded the company from neutral to buy on Monday.
Gilead Sciences Inc. (GILD) gained 1.4% after the drugmaker late
Monday said the U.S. Food and Drug Administration granted a
priority review
(http://www.marketwatch.com/story/gilead-gets-fda-priority-review-of-hepatitis-c-combo-drug-2016-01-04-181034922)
of its experimental hepatitis C combination drug.
Eli Lilly & Co. (LLY) gained 2.5% after the drugmaker
offered guidance for 2016
(http://www.marketwatch.com/story/eli-lilly-shares-fall-2-premarket-as-2016-outlook-lags-estimates-2016-01-05)
that was below current FactSet consensus levels.
(END) Dow Jones Newswires
January 05, 2016 10:48 ET (15:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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