Stocks closed mostly higher on Monday, rebounding somewhat from Friday’s losses. However, gains were pared by a fall in energy shares. Also, concerns over geopolitical tensions between Pyongyang and Washington and political events in the U.S. weighed on markets. Oil producers met on Monday to discuss the diminishing OPEC compliance about production control. However, there was no outcome on the issue following which the oil futures declined and weighed on the energy shares. Due to broad based losses, cyclical stocks such as technology and financials also declined.
The Dow Jones Industrial Average (DJIA) closed at 21,703.75, gaining 0.1% or 29.24 points. The S&P 500 Index (INX) increased 0.1% or 2.82 points to close at 2,428.37. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 6,213.13, decreasing 2.82 points or about 0.1%. A total of only around 5.26 billion shares were traded on Monday, lower than the last 20-session average of 6.36 billion shares. Declining issues outnumbered advancers on the NYSE by 1.07-to-1 ratio.
The Nasdaq posted its third day of losses and was weighed down by the tech shares. The tech laden index has closed lower in four of the five past sessions. On the Nasdaq, decliners outnumbered advancers by a 1.53-to-1 ratio.
Energy Shares Fall, Pare Overall Gains
Eight of the S&P 500’s eleven primary sectors finished higher, led by real estate stocks. However, the Energy Select Sector SPDR (XLE) declined 0.5%. Energy stocks took a battering even as oil producers met on Monday to discuss about diminishing OPEC compliance about a production control agreement, compliance with which hit its lowest levels last month.
Notably, compliance declined from 98% in June to 94% in July. The absence of an outcome led oil futures to decline by 2.4%, closing at $47.37 per barrel on the New York Mercantile Exchange. Moreover, traders are also awaiting official data ON U.S. supplies and production which is due for release later in the week.
Investors Worried about Escalating Geopolitical Turmoil
Geopolitical tensions between the U.S. and North Korea heightened on Monday. Fresh concerns were generated by the start of joint military exercises between the U.S. and South Korea even though the drills were planned well in advance.
Officials from North Korea criticized this move as heedless and also blamed Washington for heightening the “military tension” in the Korean peninsula. The officials have also indicated that this might lead to a nuclear conflict. There have been escalating tensions between Pyongyang and Washington after the renegade nation threatened to attack the U.S. naval and air base in Guam. These now familiar tensions hurt investor sentiment and overall trade volumes were very low on Monday.
Jackson Hole to Be Keenly Watched
Another reason for low trade volumes was the reluctance of traders to make large bets ahead of the annual Jackson Hole Economic Policy Symposium to be held this Friday. However, economists have clearly stated that it would be wrong to expect any major monetary policy related announcements. Investors are awaiting remarks from ECB president Mario Draghi on the monetary policies pertaining to the Eurozone. The meeting would be presided over by Janet Yellen, the Fed’s Chairwoman, alongside Mario Draghi, with the officials from central bank in attendance.
Analysts have also stated that they would be closely watching Draghi’s moves during the meeting as any policy shifts in the Eurozone would have ripple effects for the US economy. However, they do not expect any comments from him on monetary tightening and the prevalent low interest rates.
Stocks That Made Headlines
TOTAL Acquires Maersk Oil for $7.45B, Expands Globally
TOTAL S.A. (TOT – Free Report) announced that it has entered into a definite agreement to acquire Maersk Oil & Gas A/S (Maersk Oil) in a share and debt deal.(Read More)
Sempra Energy to Acquire Oncor for $18.8B, Beats Buffet
Californian utility provider Sempra Energy (SRE – Free Report) is set to buy Texas’ electrical grid giant Oncor Electric Delivery Company, LLC (Oncor). (Read More)
Will Macy’s Restructuring Plan Help Lift Stock Performance?
The retail landscape has been undergoing a fundamental change. With digital transformation in shopping and consumers splurging online, store and mall traffic has been hit hard. (Read More)
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