Traders are having a hard time these days. On one hand, the tightly correlated-to-stocks crude prices have been trading up well above the fear-triggering $30 a barrel — which has pushed stock prices up.
But on the other hand, there are concerns that recent economic news — such as today’s robust jobs report — reveals a strong economy that would force additional interest rate hikes — which is putting downward pressure on stock prices.
In the end, it seems rising crude prices are winning out and major indices closed the day up after oil rose 4.3 percent to $36.06. Moreover, stocks have clawed back much of what was lost when the market tanked during the first two weeks of the year. There’s still a way to go, but the gains are impressive.
At the bell, the Dow Jones Industrial Average gained 0.4 percent to 17,006 while the S&P 500 rose 0.3 percent to 1,999 and the Nasdaq increased 0.2 percent to 4,717. The S&P 500 Retailing Industry Index wrapped up the day with a 0.1 percent gain to 1,226.
The top gainers at the bell were: Christopher & Banks Corp., up 8.1 percent to $1.60; Pacific Sunwear of California Inc. with a 16.1 percent gain to 22 cents; Aéropostale Inc. with a 18.4 percent increase to 43 cents, and Bon-Ton Stores Inc. with a whopping 38 percent gain to $2.58.
The decliners included Delta Apparel Inc.’s 7.8 percent drop to $17.25; New York & Co. Inc.’s 4.2 percent decline to $2.30; Burlington Stores Inc.’s 2 percent decrease to $54.10, and Chico’s FAS Inc.’s 1.9 percent drop to $12.80.
For the year-to-date period, the Dow is down 2.3 percent while the S&P 500 is off 2 percent. The Nasdaq is down 3.7 percent while the S&P 500 Retailing Industry Group Index is off 2.8 percent. This compares to declines of 10 to 12 percent just one month ago. In the retail segment, reports of a lackluster holiday and heavy markdowns had many stocks plunging by 15 to 20 percent — setting new 52-week lows.
But an uptick in total retail sales — although not necessarily in fashion apparel — has investors trading stocks up in the consumer discretionary sector. And Wall Street is keeping a close eye on the overall economy, especially for signs of strength, which may trigger interest rate hikes.
IHS Global Insights chief economist Nariman Behravesh said the recent upward revision of the gross domestic product for the fourth quarter was a good sign. But there continues to be “trouble spots in the economy” Behravesh said, which includes: “excessive inventories, the plunge in energy-sector capital spending, and a big drag from net exports, due to both a strong dollar and weak growth in the rest of the world.”
“Nevertheless, consumer spending and housing will remain enduring engines of growth in 2016,” the economist added.