Oil dropped and stocks were mixed on Monday as the price of oil bounced all over the place after opening sharply lower and jumped around on headlines out of OPEC regarding a potential emergency meeting.
First, the scoreboard:
- Dow: 18,2015.1, -35.5, (-0.2%)
- S&P 500: 2,108.2, -2.1, (-0.1%)
- Nasdaq: 4,957.7, +1.8, (+0.04%)
And now, the top stories on Monday:
1. Oil was the big story. Oil prices were down about 4% early Monday morning, with some in the market pointing to the smaller decline in the number of US oil rigs in use and the repair of a pipeline in Libya as catalysts. Oil prices then rallied in the afternoon after a report from The Financial Times, citing comments from Nigerian oil minister Diezani Alison-Madueke, said OPEC will need to call an emergency meeting if prices keep falling. Bloomberg, citing an unnamed OPEC delegate, said there are no plans for an emergency OPEC meeting. The cartel is set to meet on June 5.
2. The latest manufacturing report from the Dallas Federal Reserve came in at -11.2 and showed that a number of business executives in Texas still see oil prices weighing on the economy in a major way. The report showed that one business executive in the primary metal manufacturing sector said: “There has been a rapid decline in orders over the past 30 days, primarily in energy-related work.” And the outlook remains uncertain, with one executive saying: “Oil prices have no affected backlog or sales yet. But we assume that they will in the future.”
3. Goldman Sachs had a big downgrade Monday morning, cutting shares of Boeing to a Sell from Neutral rating, citing potential levelling-off for aircraft demand. Goldman wrote in its note: “With a sustained lower fuel price and pockets of global growth volatility, the demand equation for aircraft could worsen, and Boeing shares are highly correlated to new aircraft orders.” And so again, it is all about oil right now.
4. On the economic data front, the January report on existing home sales disappointed, with sales declining 4.9% to an annualized rate of 4.82 million. This is the slowest pace of sales in nine months and missed expectations for a more modest decline of 1.8%. In a statement, Lawrence Yun, chief economist with the National Association of Realtors, said that, “January housing data can be volatile because of seasonal influences, but low housing supply and the ongoing rise in home prices above the pace of inflation appeared to slow sales despite interest rates remaining near historic lows.”
5. Apple shares powered to another record high on Monday, gaining more than 2.5% to close above $US132, giving the company a market cap well over $US750 billion and making the iPhone maker more than double the size of the US stock market’s second-largest company, ExxonMobil.
6. Also in tech news, Barron’s wrote over the weekend that as the Nasdaq closes in on 5,000 and its all-time record high from the tech bubble, things really are different this time.
7. We’re only 7 week in to 2015, but so far, the best performing stock market in the world has been a major contrarian call: Russia. In a note to clients, analysts at Goldman Sachs noted that Russia’s Micex index is up 28% this year, far exceeding the huge rallies seen in major European markets like France, Germany, and Italy, which are all up by more than 10% this year.