We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wall Street closed mixed to start second quarter of 2023. A cut in production quota by OPEC+ favorably impacted shares of oil stocks. However, growth stocks suffered fearing a spike in inflation rate. The Dow and the S&P 500 ended in positive territory while the Nasdaq Composite finished in negative zone.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 1% or 327 points to close at 33,601.15. The blue-chip index ended in green for four consecutive days. Notably, 22 components of the 30-stock index ended in positive territory and 8 in negative zone. The tech-heavy Nasdaq Composite finished at 12,189.45, dropping 0.3% due to weak performance of large-cap technology stocks.
The S&P 500 rose 0.4% to end at 4,124.51, marking its highest closing since Feb 15. Seven out of 11 broad sectors of the benchmark index closed in positive territory while four in red. The Energy Select Sector SPDR (XLE) jumped 4.5% and the Health Care Select Sector SPDR (XLV) gained 1.1%.
The fear-gauge CBOE Volatility Index (VIX) was down 0.8% to 18.55. A total of 10.9 billion shares were traded on Monday, lower than the last 20-session average of 12.7 billion. The S&P 500 recorded 20 new highs and no new lows; and the Nasdaq registered 85 new highs and 121 new lows.
OPEC+ Cuts Production Quota
The Organization of Petroleum Exporting Countries and its associate members has taken a decision to reduce aggregate production by 1.16 million barrels per day starting from May. The new quota system will continue till the end of 2023.
This followed by a decision taken by Russia to cut crude oil production by 500,000 barrels per day till the end of 2023. Saudi Arabia said the decision of OPEC+ is a “precautionary measure” aimed to stabilize the global oil market in case of a recession in 2023.
As a result of the news, the future price of the U.S. benchmark – the West Texas Intermediate crude – jumped 6.3% to settle at $80.42 a barrel, marking its biggest daily gain since Apr 12, 2022. The future price of the global benchmark – the Brent crude – also climbed 6.3% to settle at $84.93 a barrel, reflecting its biggest daily gain since Mar 21, 2022.
Several economists and financial researchers have indicated that crude oil prices could reach $100 per barrel in near future. Oil price is one of the major sources of inflation. Market participants are worried that inflation rate, which has declined considerably since its peak in June 2022, may spike once again. Despite a drop, the aggregate price level remains elevated.
Higher price level will compel the Fed to pursue higher interest rate regime and tighter monetary control for longer-than expected period. Higher interest rate detrimental to growth stocks like technology. Consequently, shares of semiconductor giants like Advanced Micro Devices Inc. (AMD - Free Report) and Micron Technology Inc. (MU - Free Report) fell 1.5% and 1.2%, respectively.
Economic Data
The Institute of Supply Management (ISM) reported that manufacturing index for March dropped to 46.3% in March, marking its lowest level since May 2020 when industrial sector was facing pandemic-related lockdowns. The consensus estimate was 47.4% and February’s data was 47.7%.
ISM said the index dropped for fifth consecutive months after witnessing a 28-month of growth. Any reading below 50% indicates contraction in manufacturing activities. Experts hinted more pain ahead as the new orders index fell to 44.3% compared with 47% in February. This index has softened over the last 10 months.
Construction spending fell by 0.1% in February compared with the consensus estimate of a break-even. January’s data was revised upward to a gain of 0.4% from a decline of 0.1% reported earlier.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Stock Market News for Apr 4, 2023
Wall Street closed mixed to start second quarter of 2023. A cut in production quota by OPEC+ favorably impacted shares of oil stocks. However, growth stocks suffered fearing a spike in inflation rate. The Dow and the S&P 500 ended in positive territory while the Nasdaq Composite finished in negative zone.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 1% or 327 points to close at 33,601.15. The blue-chip index ended in green for four consecutive days. Notably, 22 components of the 30-stock index ended in positive territory and 8 in negative zone. The tech-heavy Nasdaq Composite finished at 12,189.45, dropping 0.3% due to weak performance of large-cap technology stocks.
The S&P 500 rose 0.4% to end at 4,124.51, marking its highest closing since Feb 15. Seven out of 11 broad sectors of the benchmark index closed in positive territory while four in red. The Energy Select Sector SPDR (XLE) jumped 4.5% and the Health Care Select Sector SPDR (XLV) gained 1.1%.
The fear-gauge CBOE Volatility Index (VIX) was down 0.8% to 18.55. A total of 10.9 billion shares were traded on Monday, lower than the last 20-session average of 12.7 billion. The S&P 500 recorded 20 new highs and no new lows; and the Nasdaq registered 85 new highs and 121 new lows.
OPEC+ Cuts Production Quota
The Organization of Petroleum Exporting Countries and its associate members has taken a decision to reduce aggregate production by 1.16 million barrels per day starting from May. The new quota system will continue till the end of 2023.
This followed by a decision taken by Russia to cut crude oil production by 500,000 barrels per day till the end of 2023. Saudi Arabia said the decision of OPEC+ is a “precautionary measure” aimed to stabilize the global oil market in case of a recession in 2023.
As a result of the news, the future price of the U.S. benchmark – the West Texas Intermediate crude – jumped 6.3% to settle at $80.42 a barrel, marking its biggest daily gain since Apr 12, 2022. The future price of the global benchmark – the Brent crude – also climbed 6.3% to settle at $84.93 a barrel, reflecting its biggest daily gain since Mar 21, 2022.
Consequently, shares of oil behemoth Exxon Mobil Corp. (XOM - Free Report) and Chevron Corp. (CVX - Free Report) surged 5.9% and 4.2%, respectively. Both stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tech Stocks Tumble
Several economists and financial researchers have indicated that crude oil prices could reach $100 per barrel in near future. Oil price is one of the major sources of inflation. Market participants are worried that inflation rate, which has declined considerably since its peak in June 2022, may spike once again. Despite a drop, the aggregate price level remains elevated.
Higher price level will compel the Fed to pursue higher interest rate regime and tighter monetary control for longer-than expected period. Higher interest rate detrimental to growth stocks like technology. Consequently, shares of semiconductor giants like Advanced Micro Devices Inc. (AMD - Free Report) and Micron Technology Inc. (MU - Free Report) fell 1.5% and 1.2%, respectively.
Economic Data
The Institute of Supply Management (ISM) reported that manufacturing index for March dropped to 46.3% in March, marking its lowest level since May 2020 when industrial sector was facing pandemic-related lockdowns. The consensus estimate was 47.4% and February’s data was 47.7%.
ISM said the index dropped for fifth consecutive months after witnessing a 28-month of growth. Any reading below 50% indicates contraction in manufacturing activities. Experts hinted more pain ahead as the new orders index fell to 44.3% compared with 47% in February. This index has softened over the last 10 months.
Construction spending fell by 0.1% in February compared with the consensus estimate of a break-even. January’s data was revised upward to a gain of 0.4% from a decline of 0.1% reported earlier.