Benchmarks ended modestly higher on Thursday amid rise in oil prices and uncertainty about the timing of a rate hike. A rebound in Apple’s shares and gains in biotech stocks also had a positive impact on the markets. Meanwhile, uncertainty heading into the Federal Reserve’s two-day policy meeting next week kept a lid on gains. Data on jobless claims and import prices offered little indication about the possibility of a rate hike.
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The Dow Jones Industrial Average (DJI) gained 0.5% to close at 16,330.40. The Standard & Poor’s 500 (S&P 500) also advanced 0.5% to end the day at 1,952.29. The tech-laden Nasdaq Composite Index closed at 4,796.25, increasing 0.8%. The fear-gauge CBOE Volatility Index (VIX) declined 7.1% to settle at 24.37. A total of about 6.8 billion shares were traded on Thursday, lower than the past 20 trading days’ average of 8.1 billion. Advancing stocks outpaced decliners on the NYSE. For 51% stocks that advanced, 45% declined.
Rise in oil prices boosted the overall market. Oil prices rebounded on Thursday following expectations of further decline in oil production levels, which offset the more-than-anticipated increase in supply of weekly domestic crude oil. The price of WTI crude oil gained 3.9% to $45.92 per barrel on Thursday. Additionally, price of Brent crude advanced 2.7% to $48.89 per barrel.
Increase in oil prices helped energy shares end in the green. The Energy Select Sector SPDR (XLE) advanced 0.6%. Dow components Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX) gained 0.7% and 0.9%, respectively. Other key stocks from the energy sector including ConocoPhillips (COP), EOG Resources, Inc. (EOG) and Occidental Petroleum Corporation (OXY) increased 1.2%, 1.5% and 0.2%, respectively.
Eight out of 10 sectors of the S&P 500 ended in the green. The Technology Select Sector SPDR (XLK) advanced 1%, the highest gainer among the S&P 500 sectors. Apple Inc.’s (AAPL) shares gained 2.2%, rebounding from the day before when its new version of Apple TV, new set of iPhones and business-oriented iPad Pro failed to impress investors. Other key holdings from the technology sector including Microsoft Corporation (MSFT), Google Inc (GOOGL) and International Business Machines Corporation (IBM) increased 0.5%, 1.2% and 0.8%, respectively.
The Health Care Select Sector SPDR ETF (XLV) gained 0.9% and was the second biggest gainer among the S&P 500 sectors. Biotech stocks led the gains in the healthcare sector. Biotech stocks such as Gilead Sciences Inc. (GILD), Biogen Inc. (BIIB), Amgen Inc. (AMGN) and Celgene Corporation (CELG) increased 3.3%, 3%, 1.4% and 1.6%, respectively. Overall, the iShares Nasdaq Biotechnology (IBB) gained 1.9%.
Investors continued to focus on the Fed’s decision on interest rates next week. Thursday’s economic data came in mixed, which failed to clear investors’ doubt about the timing of the rate hike. While decline in claims for unemployment benefits suggested that the labor market is strengthening, fall in import prices indicated inflation is trending lower.
The U.S. Department of Labor reported that initial claims decreased 6,000 for the week ending Sep 5 to 275,000, in line with the consensus estimate. However, the 4-week moving average increased 500 from previous week’s level to 275,750.
Meanwhile, the prices U.S pays for imported goods declined by 1.8% last month, its biggest decline since the beginning of this year. Continuous drop in oil prices and a stronger dollar were cited to be reasons behind this decline in import prices as it makes foreign products cheaper. Imports prices excluding fuel dropped 0.4% in August.
Separately, the U.S. Department of Commerce announced that US wholesale inventories declined 0.1% in July after increasing 0.7% in June. This decline in wholesale inventories in July was in contrast to the consensus estimate of a rise of 0.3%.
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