A rig hand repairs the boom arm on a single stack drilling rig in Knox County, Ohio.
Eight of the 10 best performers in the S&P 500 (SPX) were energy companies, as the group rebounded with oil. Exxon Mobil Corp. and Chevron Corp. rallied more than 2.4 percent. Goldman Sachs Group Inc. lost 0.7 percent, declining for its sixth straight session, as it posted the lowest annual trading revenue since 2005.
The S&P 500 rose 1.3 percent to 2,019.42 at 4 p.m. in New York, climbing above its average price for the past 100 days. The benchmark index pared its loss for the week to 1.2 percent. The Dow Jones Industrial Average added 190.86 points, or 1.1 percent, to 17,511.57. The Russell 2000 Index of smaller companies gained 1.9 percent, the most in a month. More than 7.7 billion shares changed hands on U.S. exchanges, 14 percent above the three-month average. U.S. markets will be closed Monday for Martin Luther King Day.
“Momentum is ruling the day,” Jeff Sica, president and CEO of a
dvisory firm Circle Squared Alternative Investments, which oversees $1.5 billion, said in a phone interview. “The market is so zeroed in on oil prices right now. We’re seeing an oversold bounce amid oil momentum and optimism over ECB QE.”
The S&P 500 slid 3.4 percent from Jan. 8 to Jan. 15, posting its second slide of five straight days after going through all of 2014 without a losing streak of more than three days. The gauge is 3.4 percent below a Dec. 29 record.
Fed Rates
Data today showed consumer confidence jumped in January to the highest level in 11 years as steady job gains and plunging gas prices brightened the outlook for U.S. households.Another report showed the cost of living declined by the most in six years amid the plunge in energy costs, increasing speculation the Federal Reserve will remain patient in its plans to raise interest rates. The biggest drop in clothing costs since 1998 combined with falling air fares and cheaper new and used cars signal the deceleration in inflation is spreading beyond energy as Japan and Europe are in or near a recession and some emerging markets cool.
“We’ve traded with oil tick for tick all week, and until we get news from the ECB next week, that’s going to continue,” Matt Maley, an equity strategist at Miller Tabak & Co LLC in Newton, Massachusetts, said in a phone interview. “You also have more fears that it’s going to be very difficult for the economy to grow fast enough for the Fed to raise rates sooner rather than later. Expectations for a rate hike are starting to get pushed out.”
Energy Shares
All 10 groups in the S&P 500 advanced today, with energy companies rallying 3.2 percent to pace gains. Crude surged 5.3 percent as the International Energy Agency lowered forecasts for supplies from outside OPEC and said prices could recover.Exxon jumped 2.4 percent, while Chevron added 2.4 percent. Newfield Exploration Co. soared 10 percent, the most in two months, while Cimarex Energy Co. surged 7.7 percent.
U.S. stock futures fell earlier amid fallout from the Swiss currency shock. Switzerland’s central bank surprised markets Thursday by removing its cap on the franc versus the euro, sending the franc surging as much as 41 percent versus the regional currency.
FXCM Inc., the largest U.S. retail foreign-exchange brokerage, tumbled more than 90 percent in premarket trading after saying clients owe $225 million on their accounts.
Trading halted during the day pending an afternoon announcement that Leucadia National Corp., which owns Jefferies Group, gave FXCM a $300 million cash infusion, extending a lifeline to the currency brokerage. The transaction allows FXCM to “continue normal operations,” according to a statement.
Swiss Fallout
The Swiss National Bank decided to drop its currency cap, set in September 2011 to shield the economy from the euro area’s debt crisis, because it was no longer “sustainable,” central bank President Thomas Jordan said. The move is preempting possible pressure on the franc should the European Central Bank announce a government-bond purchase program, or quantitative easing, at its Jan. 22 meeting.ECB Executive Board member Benoit Coeure said in an interview with the Irish Times that there is no decision on quantitative easing yet though “the only thing I can say is that, for it to be efficient, it would have to be big.”
The Chicago Board Options Exchange Volatility Index fell 6.4 percent to 20.95, after five days of gains. The gauge, which surged 19 percent this week, reached a one-month high yesterday.
Yesterday was the 36th day since Oct. 7 that the S&P 500 incurred an intraday move of more than 1 percent. Such frequent spurts of volatility last hit the market in 36 of the 70 days through Sept. 10, 2012, data compiled by Bloomberg show.
Earnings Season
Investors are also assessing earnings reports to determine the impact of plunging oil on corporate profits. About 200 companies in the S&P 500 are scheduled to report earnings through the end of the month.Profit for companies in the gauge expanded 0.8 percent in the fourth quarter, according to analysts surveyed by Bloomberg Jan. 16. Analysts’ expectations have declined since Nov. 14, when they predicted earnings growth of 4.1 percent for S&P 500 stocks.
Goldman Sachs dropped 0.7 percent to the lowest since October. The decline in revenue helped push fourth-quarter net income 7.1 percent lower to $2.17 billion, or $4.38 a share, from $2.33 billion, or $4.60, a year earlier.
The three largest U.S. banks -- JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. -- have posted their worst combined quarterly trading revenue since 2011, led by a 23 percent drop in fixed-income, currencies and commodities, or FICC.
Precision Castparts Corp. declined 9.1 percent, the most in six years, after reporting disappointing fiscal third-quarter earnings amid a drop in demand from the energy industry.
Home Depot Inc. rose 3.1 percent after the company said its Chief Executive Officer Craig Menear will add the chairman role to his duties next month when Frank Blake retires on Feb. 2.
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