By Wallace Witkowski and Ellie Ismailidou, MarketWatch
Materials stocks lead gains; dollar struggles to recover against
yen
U.S. stocks traded higher Monday on lower-than-average volume,
but off their best levels of the session, as oil futures rallied
and the dollar traded lower against most of its rivals.
Investors were bracing for the start of the first-quarter
earnings season, which kicks off unofficially with the results from
Alcoa
(http://www.marketwatch.com/story/what-to-expect-from-alcoas-earnings-2016-04-08)
Inc. (AA) after the market closes.
The S&P 500 Index climbed 6 points, or 0.3%, to 2,054, led
by gains in the financials, consumer-discretionary, and materials
sectors. Earlier, the index had up been as many as 15 points.
The Dow Jones Industrial Average gained 79 points, or 0.5%, to
17,665, led by gains in Goldman Sachs Group Inc. (GS) and J.P.
Morgan Chase & Co. (JPM) Earlier, the blue-chip average had
been up 155 points.
Meanwhile, the tech-heavy Nasdaq Composite Index advanced 15
points, or 0.3%, to 4,866. Earlier in the session, the index had
been up 47 points.
Monday's fluctuating price action is likely the result of
lower-than-average volume, which has tapered off since the February
selloff, said Paul Nolte, portfolio manager at Kingsview Asset
Management.
"I'm struggling to see where the buying interest is coming in,"
said Nolte. "With volume so low, it's pretty easy to push prices
around."
According to Dow Jones data, year-to-date average daily volume
for the NYSE Composite is 4.43 billion shares and for the Nasdaq is
2.05 billion shares. Month-to-date, the daily average has been 3.68
billion for the NYSE and 1.73 billion for the Nasdaq. With less
than an 90 minutes of trading remaining in the day, the NYSE stood
at 2.28 billion shares and the Nasdaq stood at 1.02 billion shares
traded.
A rally in crude-oil futures
(http://www.marketwatch.com/story/crude-prices-higher-after-us-rig-count-adds-to-streak-of-declines-2016-04-11)
had boosted the main benchmarks, following a recent trend of strong
correlation between oil and stock prices.
Oil remained the "key market driver" on Monday, as firmer oil
prices were "trumping the prospects of a poor earnings season,
along with the absence of major economic reports today," said Peter
Cardillo, chief market economist at First Standard Financial.
A surge in gold prices
(http://www.marketwatch.com/story/gold-pushes-higher-to-log-best-settlement-in-3-weeks-2016-04-11)
boosted the stocks of gold miners, like Kinross Gold Corp. (KGC)
and AngloGold Ashanti Ltd. (AU) (AU)Gold continued to advance after
enjoying its best weekly gain in three weeks on Friday.
Stocks retreated from their intraday high after a slight
recovery in the dollar but the buck has been trading broadly lower
against its main currency rivals, although it has recovered some
ground against the yen
(http://www.marketwatch.com/story/dollar-drops-to-fresh-17-month-low-against-the-yen-2016-04-11).
The yen has recently been at the center of equity selloffs, as yen
strength has fueled risk aversion. The Japanese currency is
perceived as a haven in times of global economic worries.
John Manley, chief equity strategist at Wells Fargo Advantage
Funds, called the dollar-yen relationship a "market mosquito
bite."
"Sometimes a mosquito bite can really grab your attention. But
in the long run, the dollar-yen will correct -- just not in a
straight line," Manley said, adding that the impact on equities and
risk aversion could become bigger in the short term if the Bank of
Japan steps in to weaken its currency by flooding the market with
yen.
Read:Japan can't be gentle with yen intervention
(http://www.marketwatch.com/story/japan-cant-be-gentle-with-yen-intervention-2016-04-08)
Yellen and Obama: Fed chief Janet Yellen will meet President
Obama at 3 p.m. Eastern in the Oval Office. The two will discuss
(http://www.marketwatch.com/story/obama-yellen-to-meet-monday-to-talk-economy-2016-04-10)
"the state of the American and global economy, Wall Street reform,
and the long-term economic outlook, economic and regulatory
issues," the White House said in a statement.
Read:The U.S. economy--Goldilocks, it's not
(http://www.marketwatch.com/story/the-us-economy-goldilocks-its-not-2016-04-10)
Stocks to watch: Chesapeake Energy Corp.(CHK) shares surged 15%
after the company reached an amended agreement with its lenders
(http://www.marketwatch.com/story/chesapeake-amends-credit-facility-agreement-with-lenders-2016-04-11-91034841)that
allows it to borrow as much as $2.5 billion and offers relief on
some terms of its debt covenants.
Shares of Yahoo Inc. (YHOO) rose 1.9% after the U.K.'s Daily
Mail emerged as a possible bidder for the Internet group's assets,
The Wall Street Journal reported
(http://www.marketwatch.com/story/daily-mail-exploring-buyout-bid-for-yahoo-2016-04-11).
Telecom giant Verizon Communications Inc. (VZ) is also among a big
group of companies interested in Yahoo, as a deadline of April 18
looms for preliminary offers.
Shares of Hatteras Financial Corp. (HTS) surged 11% after Annaly
Capital Management Inc. (NLY) announced a deal to buy the fellow
real-estate investment trust for about $1.5 billion.
(http://www.marketwatch.com/story/annaly-capital-to-buy-hatteras-financial-for-15-billion-2016-04-11-710317)
Alcoa shares rose 3.8% ahead of earnings. The company will
report after the market closes on Monday. Wall Street analysts
expect a third straight quarter of declines in both earnings and
revenue from the aluminum producer. Read more on what to expect
from Alcoa
(http://www.marketwatch.com/story/what-to-expect-from-alcoas-earnings-2016-04-08).
Those results will come amid expectations that S&P 500
companies will deliver the worst earnings quarter since 2009.
The recent market correction appears to have come from concerns
that price-to-earnings ratios may have bounced back too quickly,
said Colin Cieszynski, chief market strategist at CMC Markets, in
emailed comments.
"The answer to the question of whether prices are currently too
high or earnings estimates are currently too low could spark
significant moves in the markets over the coming weeks," he
added.
Banks
"It's hard to argue against overall Street expectations for this
quarter being particularly low, and the interesting reports this
week will more than likely come out from the banks, which are
expected to be a front-runner for negative earnings growth this
period," said Jim Reid, strategist at Deutsche Bank, in a note to
clients on Monday.
Shares have badly lagged behind the broader market amid a
hesitancy by the Fed to raise interest rates off ultra-low levels.
Lower rates can erode the gap between what banks make on loans and
how much they pay on deposits. Financial stocks have been the worst
performing sector this year, falling 7% year to date.
On Wednesday, J.P. Morgan Chase & Co. (JPM) will report
earnings. Wells Fargo & Co. (WFC) and Bank of America Corp.
(BAC) will follow on Thursday, and Citigroup Inc. (C) on
Friday.
Other markets:European stocks
(http://www.marketwatch.com/story/european-stocks-get-a-lift-from-italian-shares-2016-04-11)
rose, led by the banking sector, while Asia
(http://www.marketwatch.com/story/china-shares-aided-by-soft-inflation-data-but-strong-yen-hits-nikkei-2016-04-11)
had a mixed day. The Shanghai Composite Index finished 1.6% higher
after soft Chinese inflation data drove hopes that authorities will
act again to stimulate the economy. The Nikkei 225 index closed
down 0.4%, weighed by yen strength.
The yield on the benchmark 10-year Treasury note gained less
than a basis point to 1.728%. Yields move in the opposite direction
of prices.
--Barbara Kollmeyer in Madrid contributed to this article.
(END) Dow Jones Newswires
April 11, 2016 14:48 ET (18:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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