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Stock Market News for April 21, 2016

Benchmarks ended in the green on Wednesday following gains in financials and energy stocks. Oil price rally boosted energy stocks upward. Also, better-than-expected earnings results had a positive impact on financial stocks. The Dow and the S&P 500 reached at their highest level since July 20 and Dec 1, respectively.

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The Dow Jones Industrial Average (DJI) increased more than 0.2%, to close at 18,096.27. The tech-laden Nasdaq Composite Index closed at 4,948.13, also gaining 0.2%. The S&P 500 rose 0.1% to close at 2,102.40. However, the fear-gauge CBOE Volatility Index (VIX) increased 0.3% to settle at 13.28. A total of around 7.5 billion shares were traded on Wednesday, higher than the last 20-session average of 6.7 billion shares. Advancers outpaced declining stocks on the NYSE. For 54% stocks that advanced, 41% declined.
Oil prices declined earlier in the day following the end of the three day oil worker strike in Kuwait. However, prices increased after U.S. crude output declined for the sixth consecutive week. The U.S. Energy Information Administration (EIA) reported that domestic crude output fell by 24,000 barrels per day (bpd) to 8.953 million bpd for the week ended April 15.
Also, the EIA reported that U.S. commercial crude oil inventories rose 2.1 million barrels to 538.6 million for the week. This was lower than an increase of 3.1 million barrels reported by the American Petroleum Institute (API). Moreover, distillate fuel inventories and motor gasoline inventories fell 3.6 million barrels and 0.1 million barrels, respectively last week. WTI crude and Brent crude rose 3.6% and 3.9% to $42.63 per barrel and $45.80 a barrel, respectively. WTI crude closed at its highest level year-to-date.
Rally in oil prices helped the Energy Select Sector SPDR (XLE) to increase 0.9% and to emerge as the second biggest gainer among the S&P 500 sectors. Dow components Chevron Corp (CVX) and Exxon Mobil Corp (XOM) rose 1.2% and 0.7%, respectively. Other key energy stocks including, Schlumberger Limited (SLB), Pioneer Natural Resources Co. (PXD), Chesapeake Energy Corporation (CHK) and Halliburton Company (HAL) advanced 1.8%, 1.7%, 4.9% and 0.8%, respectively.
In earnings news, shares of Discover Financial Services (DFS) increased 8.2% after the company posted earnings of $$1.35 per share, beating the Zacks Consensus Estimate of $1.30. Its revenues of $2.22 billion also surpassed the Zacks Consensus Estimate of $1.762 billion.
Additionally, the Financial Services Select Sector SPDR (XLFS) advanced 1.6%, emerging as the highest advancer in the S&P 500 sectors. Top holdings from the sector such as Bank of America Corporation (BAC), Wells Fargo & Company (WFC) and Citigroup Inc. (C) rose 3.3%, 1.1% and 2.4%, respectively. Dow component JPMorgan Chase & Co (JPM) increased 1.5%. Only five out of 12 S&P 500 sectors ended in the red with Utilities Select Sector SPDR (XLU), which fell 2.5%, emerging as the biggest decliner among the S&P 500 sectors.
Meanwhile, gains in Goldman Sachs Group, Inc (GS) and UnitedHealth Group Incorporated (UNH) of 2.7% and 2.6%, respectively, had a positive impact on the blue-chip index. Shares of UnitedHealth rose after the company raised its outlook and decided to withdraw from nearly all the exchanges of the Affordable Care Act by 2017. The insurer raised its 2016 earnings guidance to the range of $7.75 to $7.90 per share from $7.60 to $7.80 per share projected earlier.
Separately, Coca-Cola Company’s (KO) first-quarter adjusted earnings of 45 cents per share beat the Zacks Consensus Estimate of 44 cents. Its revenues of $10.28 billion also outpaced the Zacks Consensus Estimate of $10.26 billion.
Although Coca-Cola registered better-than-expected earnings results, its shares slumped 4.8% following decline in soda volume growth. In North America, volumes grew 2%, less than 3% growth in the previous quarter, due to softer volumes of sparkling sodas. European volumes declined 1% as against 3% growth reported in the previous quarter.
Losses in Coca-Cola led the Consumer Staples Select Sector SPDR ETF (XLP) to decline 1.4%. Key consumer staples stocks including Procter & Gamble Company (PG), Philip Morris International, Inc. (PM), Kimberly-Clark Corporation (KMB) and Pepsico, Inc. (PEP) decreased 2.1%, 1.2%, 1.1% and 1.8%, respectively.
In economic news, the National Association of Realtors reported that existing home sales for the month of March was 5.33 million units, an increase of 26,000 units from the revised level of 5.07 million units for February. Existing home sales also came in ahead of the consensus estimate of 5.27 million units.

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