After a furious four-day rally, the price of oil crashed on Wednesday, falling as much as 9% as the wild ride for oil prices continues. Stocks, meanwhile, finished mixed after starting the week with two big rallies.
First, the scoreboard:
- Dow: 17,674.3, +8, (+0.05%)
- S&P 500: 2,041.4, -8.6, (-0.4%)
- Nasdaq: 4,716.7, -11, (-0.2%)
And now, the top stories on Wednesday:
1. Oil crashed. On Wednesday, the price of West Texas Intermediate crude oil crashed back below $US49 a barrel, falling as much as 9% against where it closed on Tuesday as the commodity quickly gave up a large chunk of the gains 20% it had seen over the last couple days. With swings like this, there is almost no way to point to a single catalyst for the move. In a note to clients earlier this week, analysts at Morgan Stanley said that any rallies in oil would not last in the first half of this year.
2. On the economic data front, we got a labour market reading from payroll firm ADP, which said that in January private employers added 213,000 positions. This was less than the 223,000 expected by economists. In ADP’s release, Mark Zandi, chief economist at Moody’s Analytics had some bad news for jobs in the oil and gas space, saying, “Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices.”
3. In merger news, Staples and Office Depot announced that they will combine to form a company that in 2014 would have had a combined $US17 billion in annual sales. But of course the one word that employees at both companies are not going to be happy to see is “synergies.” In their release, the companies said, “We expect to recognise at least $US1 billion of synergies as we aggressively reduce global expenses and optimise our retail footprint.” Another way to read “synergies”? Job cuts.
4. Disney shares were the big gainers in the Dow, adding more than 7% after the entertainment company last night reported earnings that topped expectations. Walt Disney shares rose to an all-time high on Wednesday as the company continues to benefit from the sale of products related to its blockbuster hit “Frozen.”
5. Chipotle shares fell 7% after the company last night reported profit that beat estimates but said that in the upcoming year its same-store sales would rise by low- to mid-single digits. In the fourth quarter of this year, Chipotle’s same-store sales were up 16%.
6. The big theme in earnings season this quarter is the impact the US dollar is having on revenue for multinational companies based in the US. home appliance maker Whirlpool on Wednesday became the latest company to warn that the dollar would hurt its bottom line, with CEO Jeff Fettig telling Reuters that with the dollar at current levels, revenue in 2015 could take a hit of up to $US1 billion, worth about 5% of the company’s 2014 sales.
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