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Stock Market News for May 11, 2016

Benchmarks closed in the green on Tuesday following rebound in oil prices and gains in shares of Amazon. Oil prices increased after short term outages in Nigeria and Canada helped in reducing crude oversupply concerns. Both the Dow and S&P 500 registered their best intra-day percentage gains since Mar 11. The Nasdaq also posted its best one-day percentage gains since Apr 13.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) increased 1.3%, or 222.44 points, to close at 17,928.35. The S&P 500 also rose 1.3% to close at 2,084.39. The tech-laden Nasdaq Composite Index closed at 4,809.88, also gaining 1.3%. The fear-gauge CBOE Volatility Index (VIX) decreased 6.5% to settle at 13.63. A total of around 6.6 billion shares were traded on Tuesday, lower than the last 20-session average of 7.3 billion shares. Advancers outpaced declining stocks on the NYSE. For 74% stocks that advanced, 23% declined.
Oil prices rebounded yesterday after disruptions in Nigeria and Canada reduced crude oversupply worries to a significant extent. A series of militant attacks on oil infrastructure in Nigeria last week had reduced its crude production to 1.69 million barrels per day (bpd), hitting its lowest level in 22 years. Further, the wildfire that broke out in Fort McMurray, Canada dragged crude output at 1.6 million bpd.
Moreover, in a monthly report issued yesterday, the U.S. Energy Information Administration (EIA) raised its guidance for crude prices as well as production for 2017. According to the report, WTI oil price is expected to increase from previous estimate of $40.58 a barrel to $50.65 per barrel. Both the WTI crude and Brent crude rose 2.7% and 4.2% to $44.66 per barrel and $45.52 a barrel, respectively. The EIA raised its U.S. crude-oil production forecast from previous estimate of 8.04 million barrels to 8.19 million barrels.
Following oil price rebound, the Energy Select Sector SPDR (XLE) increased 1.8% and was the biggest gainer among the major S&P 500 sectors. Key components from the sector including Southwestern Energy Company (SWN), Apache Corp. (APA), Schlumberger Limited (SLB), EOG Resources (EOG) and Occidental Petroleum Corporation (OXY) increased 7.2%, 4.5%, 2.1%, 1.9%, 1.4% and 1.2%, respectively. Dow components Exxon Mobil Corp (XOM), and Chevron Corp (CVX) advanced 1.6% and 0.9%, respectively.
Also, the Materials Select Sector SPDR ETF (XLB) rose 1.7% and was one of the biggest gainers among the S&P 500 sectors. Key components from the sector including Dow Chemical Company (DOW), International Flavors & Fragrances Inc. (IFF), Newmont Mining Corporation (NEM), Freeport-McMoRan Inc. (FCX), Nucor Corporation (NUE), Monsanto Company (MON) and E. I. du Pont de Nemours and Company (DD) increased 1.4%, 5.3%, 3.8%, 3.2%, 3.1%, 2.4% and 1.4%, respectively.
Meanwhile, Amazon’s shares rose 3.4% crossing the $700 mark for the first time to close at a record high of $703.07 after a Bernstein analyst said Amazon is undervalued and is likely to rise by almost 50% to reach the $1000 per share mark by 2017. This led to gains in shares of the other FANG stocks – Facebook Inc (FB), Netflix Inc (NFLX) and Alphabet Inc (GOOGL) – which boosted the Nasdaq upward. Shares of Facebook, Netflix and Alphabet increased 1.1%, 2.6% and 1.4%, respectively.
In economic news, as per the Labor Department’s Job Openings and Labor Turnover Survey report, job openings increased to 5.8 million in March, but hiring rate fell to 3.7%. Meanwhile, the National Federation of Independent Business reported that its small-business sentiment index gained 1 point to 93.6 in April, rising for the first time this year.
In company news, shares of Allergan plc (AGN) increased 5.3% after the company gave approval to a new share repurchase program of $10 billion. Also, its first-quarter earnings of $3.04 per share were above the Zacks Consensus Estimate of $2.99 per share. However, its revenues of $3.79 billion missed the Zacks Consensus Estimate of $3.96 billion.
Separately, SolarCity Corporation’s (SCTY) shares slumped 20.8% after reporting first quarter adjusted loss of $2.56 per share, wider than the Zacks Consensus Estimate of a loss of $2.30 per share. But SolarCity posted total revenue of $122.6 million in the quarter, beating the Zacks Consensus Estimate of $105 million.

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