U.S. equities moved higher on Thursday, shaking off a fresh decline in crude oil as investors were encouraged by management efforts in the energy sector to cut costs and protect the bottom line in this price depression environment. Still, caution remains in the air as stocks finished off their intraday highs while the CBOE Volatility Index was buoyant.
In the end, the Dow Jones Industrial Average gained 0.5%, the S&P 500 gained 0.2%, the Nasdaq Composite went up 0.4% and the Russell 2000 moved up 0.3%. Treasury bonds were weaker, the dollar was stronger, gold declined, and crude oil lost 1.1%. Healthcare stocks led the way with a 0.8% gain followed by energy, which gained 0.6%.
Chevron Corporation (NYSE:CVX) gained 1.9% after saying it would reduce its 2016 capital expenditures budget by 24% year-over-year and said it would cut exploration spending to just $1 billion from $3 billion in 2015.
ConocoPhilips (NYSE:COP) said it would cut capital expenditures 25% and plans to close around $2.3 billion in non-core asset sales.
Twitter Inc (NYSE:TWTR) gained 6.6% after the company announced it would start displaying adds to the 500 million or so people that look at Twitter feeds each month but haven’t yet signed up for an account. Beleaguered action camera maker GoPro Inc (NASDAQ:GPRO) gained 11.6% after it was mentioned as one of several possible acquisition targets for Apple, Inc. (NASDAQ:AAPL).
Utilities and materials stocks were the laggards, down 1.7% and 0.8%, respectively. First Solar, Inc. (NASDAQ:FSLR) lost 7.7% after cutting margin guidance and suffering analyst downgrade.
On the economic front, the Bank of England and the Swiss National Bank both left monetary policy unchanged as focus intensifies on the upcoming “hike/no hike” decision from the Federal Reserve on Dec. 16.
The decline in crude oil continues a week-long decline that marks the black stuff’s longest losing streak since July.
This morning, OPEC’s monthly report showed the cartel’s production rose to a three-year high of 31.7 million barrels per day, a hair above the new production ceiling of 31.5 million barrels per day. In inflation-adjusted terms, oil prices are at 12-year lows.
The disconnect between energy stocks and crude oil should be resolved with a fresh downward pull in stocks like Exxon Mobil Corporation (NYSE:XOM), as investors discount continued pressure on corporate earnings growth heading into the end of the fourth quarter.
For now, I continue to recommend a defensive positioning with the VelocityShares 2x VIX (NASDAQ:TVIX) recommended to Edge subscribers up nearly 22% so far this month.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.
