Stocks Subdued by Lower Commodities Prices
November 29 2016 - 12:01PM
Dow Jones News
By Riva Gold and Akane Otani
U.S. stocks climbed higher Tuesday, led by shares of health-care
companies.
The Dow Jones Industrial Average added 17 points, or 0.1%, to
19115. The S&P 500 rose 0.2%, bringing it within 10 points of
its record close hit last week, and the Nasdaq Composite gained
0.4%.
Health-care stocks rallied, helping offset losses in the energy
sector, which were dragged lower Tuesday by falling oil prices. The
S&P 500 health-care sector added 0.7%, with UnitedHealth Group,
AbbVie and Alexion Pharmaceuticals leading gains.
Biotech companies rallied, too, lifting the tech-heavy Nasdaq
higher. The Nasdaq Biotechnology Index rose 0.4%.
Meanwhile, energy shares in the S&P 500 fell 1.7% and U.S.
crude oil fell 3.7% to $45.33 a barrel after Indonesia's oil
minister said the country hadn't decided whether to join the
proposed production cuts.
Oil prices have been volatile in recent weeks, as investors and
analysts have sought clues as to whether the Organization of the
Petroleum Exporting Countries will be able to hammer out a deal
Wednesday to cut output. Prices have climbed as high as $48 a
barrel as investors grew optimistic about an OPEC deal and
retreated to closer to $43 a barrel when those hopes have
wavered.
"Oil prices are moving on [ministers'] comments now more than
anything else until a decision comes out," said Brian Youngberg, an
energy analyst at Edward Jones. "We still think oil prices will
gradually recover in the next year or two, whether OPEC does
anything or not, but an OPEC agreement would push it forward," he
said.
In bond markets, investors returned to selling long-term U.S.
government debt, which has come under pressure since the Nov. 8
presidential election as expectations of inflation and interest
rate hikes have grown.
The yield on the 10-year U.S. Treasury note recently traded at
2.335%, according to Tradeweb, compared with 2.319% on Monday.
Yields move inversely to prices.
Earlier, yields hit session highs after the Commerce Department
said gross domestic product in the third quarter expanded 3.2%--its
fastest pace in two years. The upbeat data strengthen the case for
the Federal Reserve to raise rates next month.
The dollar also strengthened with the WSJ Dollar Index last up
0.2%.
"For now, markets are running on hope and promise," said Graham
McDevitt, portfolio manager at Macquarie Investment Management.
"The dollar and interest rates move in tandem with each other on
expectations that in six months' time and beyond, U.S. growth will
be stronger, and that will deliver a better environment for the
U.S. economy and probably higher U.S. interest rates."
Longer term, however, President-elect Donald Trump has also
mentioned trade restrictions and changes to immigration in his
platform, which could crimp growth in the future, while it remains
to be seen which policies will actually be implemented, Mr.
McDevitt added.
In Europe, banks were among the biggest gainers as Italian
lenders started to recover from a spate of losses ahead of Sunday's
constitutional referendum. Many investors have been concerned that
the vote could mark the next victory for a global antiestablishment
movement that has rattled markets so far this year.
Italy's FTSE MIB index gained 1.8%, but remains down roughly 4%
this month and roughly 23% from the start of the year.
Investors have grown jittery that a "no" vote could lead to a
period of political instability and push back plans to raise
capital for troubled lenders.
"Italy is not just a key member of the European Union, it's also
part of the eurozone," said Brian Jacobsen, chief portfolio
strategist at Wells Fargo Funds. If there is widespread political
and market turmoil following the referendum, "it raises a lot of
concerns about what it means for the health of the financial system
in the eurozone," he said.
Earlier, Asian markets mostly retreated. Japan's Nikkei Stock
Average fell 0.3%, led lower by financials and electronics, while
stocks in Hong Kong inched down 0.4%. The Shanghai Composite eked
out small gains to reach its highest closing value since
January.
Write to Riva Gold at riva.gold@wsj.com and Akane Otani at
akane.otani@wsj.com
(END) Dow Jones Newswires
November 29, 2016 11:46 ET (16:46 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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