The weakness of the equities of companies in the energy sector negatively impacted the stock markets in the United States particularly the S&P 500 and the Dow Jones Industrial Average (DJIA) today.
Today, the Brent crude oil futures declined to its lowest level in 16 months due to the possibility of slowing demand for oil in China and Europe. The abundant supply and a strong dollar pushed the oil price in the United States to a seven-month low, according to Reuters.
The report noted that the oil prices on both side sides of the Atlantic have been declining steadily since the end of June as concerns over supply disruption in Iraq, Libya and Russia faded.
Data showed that the U.S. manufacturing in the United States expanded at the fastest paced in three years. The Institute of Supply Management’s manufacturing index rose to 59%, the highest level since 2011.
In a telephone interview with Bloomberg, Joe Bell, senior equity analyst at Schaeffer’s Investment Research commented, “The manufacturing index was better than expected, but after that strong rally we had through much of August, the market is taking a bit of a breather.”
Bell added, “The 2,000 area is still in play, and we’ve yet to move past it convincingly as it remains a speed bump in the short-term.”
On the other hand, Kevin Caron of Stifel Nicolaus & Co., opined, “Overall, data supports the idea that the economy is accelerating going into the second half of the year, which certainly helps the equity markets. You’ve had investors who have been increasingly encouraged by the direction of the data in the economy. They’ve been discouraged from holding assets in low-yielding, safer assets.”
Meanwhile, the manufacturing data in United Kingdom weakened more than expected and Italian manufacturing decline. The European region is suffering from the weakening demand and increasing geopolitical risks. China’s output growth also slowed down.
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 17,067.56 (-0.01%)
- S&P 500- 2,002.28 (-0.05%)
- NASDAQ- 4,598.19 (+0.39%)
- Russell 2000- 1,179.47 (+0.44%)
European Markets
- EURO STOXX 50 Price EUR- 3,180.29 (+0.17%)
- FTSE 100 Index- 6,829.17 (+0.06%)
- Deutsche Borse AG German Stock Index DAX- 9,507.02 (+0.30%)
Asia-Pacific Markets
- Nikkei 225- 15,668.60 (+1.24%)
- Hong Kong Hang Seng Index- 24,749.02 (-0.01%)
- Shanghai Shenzhen CSI 300 Index- 2,386.46 (+1.32%)
Stocks in Focus
The stock price of Compuware Corporation (NASDAQ:CPWR) rose more than 13% to $10.58 per share after announcing its agreement to sell itself to Thoma Bravo for $2.5 billion. The company said Elliott Management agreed to vote its stake in the company in favor of the transaction.
The Home Depot, Inc. (NYSE:HD) declined more than 2% to $91.15 per share on report that it is investigating a potential credit card data breach, and it is working with banks and law enforcement regarding the issue.
The shares of Staples, Inc. (NASDAQ:SPLS) rose more than 8% to $12.63 per share today. Analysts at Credit Suisse upgraded their rating for the stock to Outperform from Neutral and raised their price target from $11 to $15 per share.
