The equity futures market is well in the red following a day of mixed trading in the markets Tuesday. In a significant development, Conoco Phillips (COP), a leading oil exploration and production company, has announced its intention to acquire Marathon Oil (MRO) in an all-stock transaction. This move follows large acquisitions announced by Exxon Mobile (XOM) and Chevron (CVX) in recent quarters. The Conoco-Marathon transaction is expected to close in the fourth quarter, pending regulatory and shareholder approvals.
Most stocks in the market are trading lower pre-market today, suggesting a weak start to the trading day. Later, the release of the Federal Reserve’s Beige Book, formally known as the Summary of Commentary on Current Economic Conditions, will occur, providing some insight into how well the economy is faring and future interest rate policy decisions.
The stock market demonstrated some resilience Tuesday. Notably, semiconductor company NVIDIA Corp. (NVDA) continued its surge higher, rallying around 7% and contributing to the upward movement of the S&P 500 and NASDAQ, given its large weighting in those indices. The NASDAQ, in fact, surpassed the 17,000 threshold and established an all-time high. Overall, the S&P 500 rose one point (up 0.03%), and the NASDAQ increased 99 points (up 0.59%). However, the Dow Jones Industrial Average fared much worse, falling 217 points (down 0.55%). Market breadth was rather negative, with decliners outpacing advancers by a 1.9-to-1.0 ratio. Energy issues were among the best performers, while healthcare stocks and industrial issues were among the weakest.
In commodity news, oil prices rapidly increased yesterday as traders priced in expectations of an extension from OPEC+ countries of low production at their meeting on Sunday. Elsewhere, U.S. Treasury bond yields were higher, as the 10-year Treasury yield eclipsed 4.5% yesterday. Traders have been pricing in fewer interest rate cuts into future periods, and a small contingent believes that a further Fed Funds interest rate hike may occur. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear indicator, rose yesterday as traders demanded more options protection.
Several economic reports will be released later this week. These include the first revision to first-quarter GDP, initial jobless claims, and pending home sales for April on Thursday. Of greatest interest to most investors, on Friday, the core- and non-core Personal Consumption Expenditures (PCE) price index will be released. Elsewhere, a few dozen companies, including DOW-30 component Salesforce (CRM), will report quarterly results later today. - John E. Seibert III
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
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