Stocks inch up ahead of Central Bank's decisions
U.S. stocks on Tuesday ended little-changed on 20 september 2016, paring modest gains into the close, as traders grew cautious on the eve of a pair of major central-bank decisions. Volatile oil prices pressured energy shares, limiting overall gains.
The Dow Jones Industrial Average rose a tepid 9.79 points, or less than 0.1%, to close at 18,129.96, with gainers and decliners split evenly among the 30 Dow components. The Nasdaq Composite Index advanced 6.33 points, or 0.1%, to 5,241.35, nudged higher by gains in biotech. The S&P 500 index finished up less than a point at 2,139.76.
Health care and consumer staples led winners, while energy shares lagged behind. Merck & Co.and McDonald's topped advancers, while Exxon Mobil and DuPont& Co. were the worst blue-chip performers.
Among economic data expected at Wall Street, Housing starts for August came in at a seasonally adjusted rate of 1.142 million (consensus 1.186 million) while building permits fell to 1.139 million (consensus 1.160 million) due entirely to a 7.2% decline in permits for multi-unit dwellings. The data follows yesterday's above-consensus reading of the NAHB Housing Market Index for September. Although overall market reaction to weaker-than-expected housing starts data ahead of the bell was muted, home-building stocks such as Lennar Corp and PulteGroup were hit hard, falling 3.5% and 2.9% respectively.
The Fed will release its updated policy statement at 2 p.m. Eastern Time on Wednesday. Investors widely expect the central bank to stand pat on interest rates, so attention is instead being trained on the BOJ where policy surprises are seen as more likely. Japanese policy makers have fought hard in recent years to battle low inflation, slow growth and a strong yen, lowering rates into negative territory and launching an aggressive asset-purchase program. However, there is a heightened sense the measures aren't producing their desired result.
The health care sector outperformed as drug manufacturers and biotechnology names displayed relative strength. Biotechnology rallied after Allergan agreed to acquire Tobira Therapeutics for an upfront payment of $28.35 per share. This constitutes a 498.0% premium from Tobira's prior closing price. The agreement also contains Contingent Value Rights that could increase total considerations up to $49.84 per share.
Crude oil futures ended on a mixed note on Tuesday, 20 September 2016 with Brent crude modestly lower but West Texas Intermediate crude slightly higher, as traders weighed the possibility of a crude output deal following reports that Russia supports a one-year pact to stabilize prices.nHowever, weekly data expected to show the first increase in U.S. crude supplies in three weeks and a substantial slide by gasoline futures, with a major gasoline pipeline expected to return to operation on Wednesday, kept prices in check.
October West Texas Intermediate crude rose by 14 cents, or 0.3%, to settle at $43.44 a barrel on the New York Mercantile Exchange on the contract's expiration day. The November WTI contract which became the front month, added 19 cents, or 0.4%, to $44.05. However, November Brent crude on the ICE Futures exchange in London lost 7 cents, or less than 0.2%, to finish at $45.88 a barrel.
Bullion prices ended in a mixed mode on Tuesday, 20 September 2016 at Comex. Gold futures on Tuesday ended with a slight gain, but moved in a narrow trading range, as focus remained fixed on the dollar's next move a day ahead of policy announcements from the U.S. Federal Reserve and Bank of Japan.
December gold picked up 40 cents to settle at $1,318.20 an ounce. The metal closed 0.6% higher on Monday. December silver fell 1.3 cents, or less than 0.1%, to $19.277 an ounce on Tuesday.
The ICE U.S. dollar index, a measure of the greenback against six currencies, was up 0.2%.
Treasuries ended on a higher note with the long end of the curve outperforming. The yield on the 2-yr note fell one basis point (0.77%) while the yield on the 10-yr note declined three basis points (1.69%).
Today's participation was below the recent average as fewer than 741 million shares changed hands on the NYSE floor.
Tomorrow's economic data will be limited to the weekly MBA Mortgage Index, which will be released at 7:00 ET. Meanwhile, the FOMC will release its September policy statement and rate decision at 14:00 ET.
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