Stocks rose Thursday morning in reaction to stronger-than-expected retail sales. But as the day progressed and oil prices fell under $60 a barrel, the major indices gave back much of their gains. The S&P 500, which was 1.5% higher in the morning, closed up just 0.5%.
Retail sales rose a seasonally adjusted 0.7% in November versus October, the biggest jump in eight months, beating analysts’ forecast of a 0.4% increase. And first-time jobless benefits declined to the lowest level in three weeks, indicating that the labor market continues to improve.
The SPDR S&P Retail ETF (XRT) gained 1.3%. Costco Wholesale Corporation (COST) was up 0.8%, and Wal-Mart Stores, Inc. (WMT) rose 1%. But RadioShack Corporation (RSH) fell 7.3% as it outlined a $400 million cost-cutting plan it hopes will get it through the holiday season and trigger a rescue by lenders.
Energy stocks fell sharply, especially those whose revenues rely on U.S. shale oil. Some analysts predict that crude is near a bottom; however, Thursday’s decline did not support that.
November PPI will be released at 8:30 a.m., and the consensus expects a 0.1% decline. The Reuters/University of Michigan’s consumer sentiment index will be reported at 9:55 a.m., and the consensus estimates a reading of 89.5.
At Thursday’s close, the Dow Jones Industrial Average gained 63 points at 17,596, the S&P 500 rose 9 points to 2,035, the Nasdaq gained 24 points at 4,708, and the Russell 2000 rose 5 points to 1,167.
The NYSE’s primary market traded 823 million shares with volume of 3.9 billion, and the Nasdaq crossed 1.8 billion shares. Advancers outpaced decliners on both exchanges by about 1.5-to-1.
This United States Oil Fund LP ETF (USO) tracks the performance of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. On Thursday, the fund broke an all-time low set in February 2009.
Though some analysts estimate that crude oil is now making a significant bottom, this chart does not support that reasoning.
The Market Vectors Oil Services ETF (OIH) is faring no better, reflecting the oversupply and lack of demand.
This minute-by-minute chart of the Russell 2000 shows a gap up on the opening that took prices to a daily high before 11 a.m. After that, it was downhill until the close. In aftermarket trading, the index fell even further.
If you are thinking of making an investment in oil stocks, I’d think again. There is no evidence of a bottom.
As for the selling in the Russell 2000, you probably wouldn’t notice how strong it was on a standard bar chart. But on this minute chart, it is clear that unless some outstanding economic numbers overcome the potential sellers, we will probably open lower this morning.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.