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26Oct2015 Market Close: Markets Close Mixed On Low Volume, Oil Closes In The Red, Treasury Yields Decline Before The FOMC Meeting

Written by Gary

Large caps closed fractionally down and about where they have been all day, sea-sawing just at the unchanged line weighed down by a sharp selloff in energy shares. WTI crude prices are teetering dangerously on the bottom end of the support level (43.82) ended in the red on Monday with lingering concerns over a global supply glut and weakening demand pushing prices to their lowest settlement in roughly two months.

Todays S&P 500 Chart

Treasury yields decline Monday as investors await the Federal Reserve's two-day meeting on monetary policy as well as a flurry of first-tier U.S. economic data later this week.

The Market in Perspective

Here are the headlines moving the markets.

Dow, S&P 500 inch down with Apple, energy stocks

(Reuters) - The Dow and the S&P 500 edged lower on Monday after recent gains as energy shares fell with oil prices and Apple retreated a day before its quarterly results.

With global outlook weak, many U.S. companies tighten belts

NEW YORK (Reuters) - U.S. companies are far from optimistic that next year will see them get a break from the tough economic and market conditions they have faced in 2015. And that may well hurt capital investment and jobs growth.

Crude oil down, extending two-week slide on product glut worry

NEW YORK (Reuters) - Crude prices edged lower on Monday, staying under pressure after two straight weeks of losses, on worries that the oversupply in oil products could swell from unseasonably warm weather and the waning maintenance cycle for U.S. refineries.

Xerox to review operations, not considering sale of company

(Reuters) - Xerox Corp , best known for its printers and copiers, said it would review its businesses and capital allocation options, but was not currently considering a sale of the company.

U.S. new homes sales near one-year low; drop seen as temporary

WASHINGTON (Reuters) - New U.S. single-family home sales fell to near a one-year low in September after two straight months of gains, but a jump in prices suggested that housing remained on solid ground.

Pavlov's Market

Submitted by Joseph Y Calhoun via Alhambra Investment Partners,

Stocks rallied strongly last week in response to comments by Mario Draghi that signaled a willingness, a determination in fact, to engage in more monetary stimulus. In fact, Draghi seemed to promise - once again - to do "whatever it takes", offering to consider "a whole menu of monetary policy instruments" in saying that the ECB was now "vigilant". One wonders why they were less than vigilant before last week but the market didn't much care about that. Apparently the use of the V word is code in Europe for more interest rate cuts - a minus sign by itself apparently not sufficient to revive the sclerotic European economy - something of which I was blissfully unaware until Friday. Stock market punters certainly got the message and bid stocks higher the world over, presumably in anticipation of better growth.

Why exactly more monetary stimulus now - after repeated applications of extreme policy in recent years - should be expected to produce more growth is a bit of a mystery. To date, there is no country one can point to and say that QE was an unmitigated success, that it restored a country's economy to full health. And I doubt there ever will be since it only gets applied in countries or regions that are having severe economic problems, generally ones that are immune to monetary nostrums. You can't fix fiscal and regulatory problems with more bank reserves and a cheaper currency.

Nevertheless, monetary stimulus in whatever form has become associated since the last economic crisis with rising stock prices and the mere hint of more stimulates, if nothing else, the algorithms that do most of the trading these ...

Operational & Financial Stress Unavoidable For Energy Names, Goldman Warns Distillate Storage "Too Full For Comfort"

Distillate storage utilization in the US and Europe is nearing historically high levels, following near record refinery utilization, only modest demand growth (especially relative to gasoline), and increased imports from the East on refinery expansion and Chinese exports. As Goldman warns, this raises the spectre of 1998/2009 when distillate storage hit capacity, pushing runs and crude oil prices sharply lower. This also raises the question of whether today's oil market can rebalance through financial stress - prices remaining near their current low level through 2016 - or if operational stress - breaching storage capacity and forcing prices below cash costs - is unavoidable.

As Goldman details, the build in Atlantic distillate inventories this year has been large, following near-record refinery utilization in both the US and Europe, only modest demand growth, especially relative to gasoline, and increased imports from the East on refinery expansion and rising Chinese exports.

As a result, and despite a cold winter in both Europe and the US last year, European and US distillate storage utilization is reaching historically elevated levels, driving a sharp weakening in heating oil and gasoil time spreads.

Such high distillate storage utilization has two precedents, leading in both cases to storage capacity running out in the springs of 1998 and 2009, pushing runs and crude oil prices and timespreads sharply lower. This rai ...

U.S. Stocks Slip Ahead of Fed Meeting

U.S. stocks slipped Monday as oil prices slumped and investors looked ahead to this week’s meeting of the Federal Reserve.

Betting Against a Fed Rate Rise

The global economy’s troubles are casting a long shadow over this week’s Fed policy meeting. Investors see a growing likelihood that there will be no rate increase this year.

The Fed: Fed rate hike is a risk to stocks and corporate bonds, government says

The government agency tasked with monitoring the stability of U.S. financial markets says a big risk to asset prices is the Federal Reserve.

Bond Report: Treasury yields fall on weak data ahead of Fed meeting

Treasury yields decline Monday as investors await the Federal Reserve's two-day meeting on monetary policy as well as a flurry of first-tier U.S. economic data later this week.

Earnings Outlook: What to expect in PayPal's earnings

Investors will get a look at how the payments business has fared since splitting from eBay, as PayPal reports third-quarter earningsâ€"its first post-split earningsâ€"after the bell Wednesday.

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Earnings Summary for Today

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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