Investment Commentary –November 30TH, 2016
Market Indices as of Market Close November 30thh, 2016
Dow 19,123 (8.28% YTD)
S&P 2,198 (6.51% YTD)
NASDAQ 5,323 (5.73% YTD)
Global DOW 2,454
U.S. 10yr 2.386
Wall St. Posts big Nov gains; mostly dips on day despite energy
U.S. stocks ended with big gains for November on Wednesday thanks to a sharp post-election rally but finished the day mostly lower as drops in utilities and technology offset energy’s surge. Energy shares jumped with oil prices after OPEC agreed to cut production. U.S. oil prices soared 9.3 percent, while the S&P energy index jumped 4.8 percent.
Bank shares also rose after comments by Steven Mnuchin, President-elect Donald Trump’s pick for U.S. Treasury secretary, told CNBC that tax reforms and trade pact overhauls would be top priorities of the new administration. Bank of America gained 4.5 percent, while Goldman Sachs ended up 3.6 percent and hit a high of $220.77, its best level since the financial crisis.
But top dividend payers like utilities and telecommunications companies, whose stocks tend to fall as interest rates rise, declined as U.S. bond yields jumped. The S&P utility index was down 3.2 percent, while shares of AT&T fell 2.2 percent.
Investor expectations are high that the Federal Reserve will raise benchmark U.S. interest rates at its December meeting.
“There’s some symmetry in the day,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
“We’ve come a long way and we were biting off a lot of expectations as to what’s to come. At some point the market is just due for a pause, and we may be in the midst of that now.”
For the day, the Dow Jones industrial average was up 1.98 points, or 0.01 percent, to 19,123.58, the S&P 500 lost 5.85 points, or 0.27 percent, to 2,198.81 and the Nasdaq Composite dropped 56.24 points, or 1.05 percent, to 5,323.68.
For November, the Dow rose 5.4 percent, its best monthly gain since March, while the S&P 500 was up 3.4 percent and the Nasdaq was up 2.6 percent. All three indexes hit record highs this month. Investors expect Trump’s election will lead to higher spending on infrastructure and simpler regulations.
Oil jumps over 10 percent as OPEC finalizes output cut deal
Oil soared more than 10 percent on Wednesday to over $50 a barrel and it’s highest in a month as some of the world’s largest producers agreed to curb production for the first time since 2008 in a bid to support prices. Crude prices rose nearly 5 percent for the month. However, they are unlikely to skyrocket further in reaction to the deal and the rally may even be short-lived, traders and analysts said.
The Organization of the Petroleum Exporting Countries, which accounts for a third of global oil supply, agreed to cut production from January by around 1.2 million barrels per day (bpd), or over 3 percent, to 32.5 million bpd.
The cut will put production at the low end of a preliminary agreement struck in Algiers in September, and will reduce output from a current 33.64 million bpd. The group’s de facto leader Saudi Arabia said it would take the lion’s share of cuts – reducing output by almost 500,000 bpd to 10.06 million bpd – to get the deal done.
Iraq, OPEC’s second largest producer which had previously resisted cuts, providing a hurdle to a deal, agreed to reduce output by 200,000 bpd to 4.351 million bpd. Iran was allowed to boost production slightly from its October level. This was a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions.
Non-OPEC member Russia, which had long resisted cutting output and pushed its production to new record highs in recent months, agreed to cut output by 300,000 bpd. OPEC will meet with non-OPEC producers on Dec. 9.
THIS DAY IN FINANCIAL HISTORY: 11 Traders Face Stiff Penalties
On this day in 1995 the United States Justice Department indicted 11 brokers for scheming to swipe investor’s money. The rulings came with the usual fines but this case also tacked on prison terms for the 11 criminals.
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