Stocks rallied on Monday after three consecutive weekly losses, and oil stayed near six-year lows following its plunge over the weekend.
First the scoreboard:
- Dow: 17,986.72, +237.41, (1.34%)
- S&P 500: 2,080.49, +27.09, (1.32%)
- Nasdaq: 4,928.12, +56.36, (1.16%)
And now, the top stories on Monday:
- All the major economic data points released on Monday were disappointing. Industrial production climbed by 0.1% in February, missing the expectation of 0.2%, while capacity utilization fell to 78.9%, compared to 79.5% forecast. Manufacturing output was expected to be flat, but fell 0.2%. January industrial production was revised lower to -0.3% from 0.2% previously reported. The “unusually severe winter weather” distorted the data, according to Capital Economics’ Paul Dales. Also, the New York Fed’s Empire State manufacturing survey came in at 6.90 versus expectations for 8.00 and down from 7.8 last month.
- Homebuilder confidence fell to 53 from 56 in February, according to the National Association of Homebuilders. Expectations were for a print of 56. Pantheon Macro’s Ian Shepherdson wrote: “In one line: Weather. Again.”
- Crude oil fell by as much as 4% to trade near a six-year low, extending a decline that began Sunday. West Texas Intermediate crude oil tanked to as low as $US42.85 per barrel. The US oil market is oversupplied, and the International Energy Agency has warned that this will drive oil prices even lower. And according to Citi, weaker energy stocks could drag down the entire S&P 500 index.
- Meanwhile, an adviser to Saudi Arabia’s minister of petroleum says oil prices will firm, and has presented a different reason why oil cartel OPEC did not cut production last year. It was widely believed that OPEC made a politically motivated decision to guard market share that was being poached by competitors like the US. In a speech in Doha on Sunday, Ibrahim Al-Muhanna clarified that Russia and Mexico, both non-OPEC countries, failed to agree on a cut the day before OPEC’s meeting and decision.
- Private equity firms Leonard Green & Partners and TPG Capital will buy Life Time Fitness in a $US4 billion deal, the investors announced early Monday. The Minnesota-based gym chain has over 110 locations nationwide. Shares of Life Time Fitness rallied by more than 5% in trading. There have been a growing number of deals with huge valuations in the sector. Last Wednesday, Reuters reported that SoulCycle is planning an IPO.
- The euro could fall to parity with the dollar within the next six months, according to Goldman Sachs. The currency rebounded to around $US1.0594 after earlier falling to its weakest level in 12 years. “We … update our forecast to 1.02, 1.00 and 0.95 in 3, 6 and 12 months (from 1.12, 1.10 and 1.08 previously), as well as 0.85 and 0.80 at end 2016 and end 2017 (from 1.00 and 0.90), respectively,” Goldman’s Robin Brooks wrote in a note.