Oil Surges Higher, Volatility Continues
In a now familiar volatile fashion, U.S. equities finished the final trading day of a turbulent month lower.
Stocks did close well above the worst levels of the session as crude oil prices continued a sharp rally amid a reduced output estimate from the U.S. government and with OPEC recommencing its willingness to talk with other producers to achieve equilibrium in the oil market.
Treasuries and the U.S. dollar were lower and gold was slightly higher, while Fed Vice Chairman Stanley Fischer relayed some relatively hawkish comments in a speech on Saturday.
The Dow Jones Industrial Average declined 115 points (0.7%) to 16,528
The S&P 500 Index lost 17 points (0.8%) to 1,972, the S&P 500 lost a little more than 6% on the month, it’s worst monthly decline since May 2012 when the S&P 500 gave back 6.4%. YTD the S&P 500 is down nearly 4%.
The Nasdaq Composite fell 52 points (1.1%) to 4,777
In moderately heavy volume, 1.1 billion shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq
WTI crude oil surged $3.98 to $49.20 per barrel and wholesale gasoline jumped $0.10 to $1.50 per gallon
The Bloomberg gold spot price added $1.84 to $1,135.45 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—decreased 0.3% to 95.86
August regional manufacturing activity mixed
The Chicago Purchasing Managers Index showed Midwest activity slowed but remained in expansion territory (above 50), declining to 54.4 in August from 54.7 in July, and versus the Bloomberg expectation of a slight decline to 54.5.
The Dallas Fed Manufacturing Index surprisingly fell to -15.8 for August from July’s unrevised -4.6 level, though economists had forecasted an improvement to -4.0, with a reading below zero denoting contraction.
Treasuries gave up early gains and finished lower, with the yield on the 2-year note ticking 2 basis points higher to 0.74%, the yield on the 10-year note increasing 3 bps to 2.21% and the 30-year bond rate gaining 4 bps to 2.95%, respectively.
Tomorrow’s U.S. economic calendar will be focused on August manufacturing activity with the release of Markit’s final Manufacturing PMI Index, forecasted to remain at the preliminary level of 52.9 but down from the 53.8 reading posted in July. Also we will get the ISM Manufacturing Index, expected to dip to 52.5 from 52.7 in July.
Europe mostly lower and Asia mixed on Fed uncertainty and China concerns
The European equity markets traded mostly to the downside, with comments from Federal Reserve Vice Chairman Stanley Fischer at the Central Bank’s annual gathering over the weekend in Jackson Hole, Wyoming, appearing to keep some expectations for a September rate hike intact. Also, continued volatility in China remained a drag on global sentiment, while the European Central Bank monetary policy decision looms on this week’s horizon. In economic news, German retail sales rose more than expected in July, and the eurozone consumer price inflation estimate for this month came in a bit stronger than anticipated. The euro was modestly higher versus the U.S. dollar, while bond yields in the region gained ground. Finally, The U.K. markets were closed for a holiday.
France’s CAC-40 Index was down 0.5%, Germany’s DAX Index decreased 0.4%, Spain’s IBEX 35 Index fell 0.9%, and Italy’s FTSE MIB Index declined 0.2%, while Switzerland’s Swiss Market Index traded 0.5% higher.
Stocks in Asia finished mixed with China’s volatility continuing, while Fed September rate hike uncertainty persisted following comments over the weekend at the Central Bank’s annual symposium in Jackson Hole, Wyoming. In mainland China, stocks pared losses but finished lower with traders grappling with whether the government’s efforts to try to stabilize the markets will be enough to stem the recent tumble. The move came ahead of tonight’s August reports on manufacturing and services sector activity. Japanese equities fell as strength in the yen weighed on export stocks, while a report showed the nation’s industrial production unexpectedly fell in July to exacerbate sentiment. Indian securities declined ahead of a read on the country’s 2Q GDP after the closing bell, which showed the nation’s growth slowed more than expected to a 7.0% year-over-year pace of expansion, from 7.5% in 1Q and compared to the 7.4% rise that was expected. Stocks in Australia dropped ahead of tonight’s monetary policy decision from the Reserve Bank of Australia. However, South Korean equities ticked higher as some strength in automakers helped push the index into positive territory in late-day action.