US stocks ended lower on Monday as oil price gains waned and investors grew ever more anxious ahead of the Fed’s rate decision mid-week.
The S&P 500 index closed down 0.1% at 2256 and led by
Alexion Pharm Inc (NASDAQ:ALXN) down 12.9% to $115.03 after a sudden boardroom change.
The second-biggest decliner was Viacom (NASDAQ:VIAB), owner of Paramount Pictures, which dropped 9.4% to $34.98 after Sumner Redstone’s National Amusements group, the controlling shareholder in CBS (NYSE:CBS) and Viacom, scrapped its push for the two media companies to combine.
Oil prices, as much as 5% higher intraday, ended up 1.8% at $52.43, according to the US benchmark, the West Texas Intermediate. Earlier, the market was buoyed as other nations, including Russia backed oil cartel OPEC’s supply cut deal.
Call demand on the S&P 500 is running at a record high in an indication that market participants expect the rally in US stocks to continue, according to Credit Suisse research.
Out another way, investors haven’t been this confident that the bourse will continue to rally since data began to be measured In 1997.
The measure takes into consideration the difference between the implied volatility on out of the money calls versus implied volatility on at the money calls.
The S&P 500 has added more than 5% since Donald Trump’s surprise US presidential election victory on hopes that he will successfully pursue policies to stimulate the US economy, reduce taxes and lighten regulatory scrutiny on areas like banking.
But that was for another day.
The S&P Midcap 400 ended down 0.6% at 1682 and led by Allegheny Technologies Inc (NYSE:ATI), down 7.6% to $17.50. A week ago Allegheny announced its board’s decision to suspend its quarterly dividend, effective from the fourth quarter of 2016. Allegheny is expected to save roughly $35mln annually through the suspension.
Meanwhile, the S&P Smallcap 600 closed down 1% at 848 and led by Stage Stores (NYSE:SSI) down 13.1% to $4.57.
The wider small-cap Russell 2000 shed 1.1% to 1373 and led by Ophthotech Corp (NASDAQ:OPHT) down 86.3% to $5.31 after the pharma announced a disappointing pivotal phase 3 trial of Fovista in eet age-related Macular Degeneration.
Most US tickers marked fresh record highs on Friday, but with a big, albeit priced in, event such as the Fed rate decision on Wednesday where investors expect a 25 basis points hike in interest rates, some fund managers decided booking profits was a wise path.
Early trading
US stocks opened firmer on Monday, with a half-hearted attempt to show solidarity with the highest oil prices since mid-2015, but held back by the vigil for this week’s Fed rate meeting.
The Fed hiking by 25 basis points is 100% priced into credit markets since four weeks.
The S&P 500 market bellwether was up 0.1% at 2261 and led by Regeneron Pharmaceutical (NASDAQ:REGN) up 5.3% to $392.76 after brokers at Chardan Capital Markets upgraded Regeneron Pharma to a Neutral from a Sell in a note released on Monday, and has set a 12-month target price at $350.
At the end of last week Regeneron Pharmaceuticals announced that the European Medicines Agency has accepted for review the Marketing Authorization Application for Dupixent (dupilumab) for the treatment of adults with moderate-to-severe atopic dermatitis who are candidates for systemic therapy.
US crude futures jumped more than 5% on Monday after Russia and other big oil producers agreed over the weekend to join OPEC members in cutting their output next month.
The group of nations -- which also includes Mexico and Kazakhstan -- will aim to reduce their production by 558,000 barrels a day, according to a statement. That follows OPEC's deal last month to cut its overall production by 1.2mln barrels a day.
Less oil in the market should mean higher prices.
Leading the laggards on the S&P 500 was Alexion Pharm Inc (NASDAQ:ALXN), down 13.9% to $113.78 after a sudden boardroom change.
Alexion named David Brennan as Interim Chief Executive Officer, effective immediately following the resignation on Monday of David Hallal for personal reasons. Brennan is the former Chief Executive Officer and Executive Director of AstraZeneca PLC and has been a member of the Alexion Board of Directors since July 2014.
Entertainment group 21st Century Fox (NASDAQ:FOXA) was down 5.4% at $26.70 as investors judged late Friday’s news that Rupert Murdoch’s group has made a “Possible Offer” to purchase the remaining 61% stake in Europe’s leading pay-TV broadcaster Sky plc. The company already owns 39.1% stake in Sky. The buyout will strengthen the company’s position in pay-TV network in Britain, Ireland, Austria, Germany and Italy.
The S&P Midcap 400 was up 0.06% at 1693 and led by Sm Energy Company (NYSE:SM) after oil price gains.
But the S&P Smallcap 600 was down 0.2% at 855 and led by Depomed Inc (NASDAQ:DEPO), down 9.6% to $18.27 after investor Deltec Asset Management LLC decreased its stake in shares of Depomed by 14.7% during the third quarter, it was revealed on Monday.
Conversely, the top gainer was Northern Oil and Gas (NYSE:NOG) up 10.2% to $3.47.
Wall Street stocks finished last week with another round of record highs as the sharp rally triggered by Donald Trump’s surprise presidential victory showed no signs of easing.
But this week will be hard going especially with the Fed expected to hike interest rates on Wednesday.
Pre-Open
US stocks are expected to open unchanged on Monday as the market prepares for the Fed’s interest rate decision midweek, after closing the previous week at record highs.
The Fed hiking by 25 basis points is 100% priced into credit markets since four weeks.
But market upside potential exists, as oil prices surged on Monday, with the US benchmark West Texas Intermediate up 4.3% to $53.70. Earlier the future hit $54.51 – its highest point since July 2015.
U.S. crude futures jumped more than 5% on Monday after Russia and other big oil producers agreed over the weekend to join OPEC members in cutting their output next month.
The group of nations -- which also includes Mexico and Kazakhstan -- will aim to reduce their production by 558,000 barrels a day, according to a statement. That follows OPEC's deal last month to cut its overall production by 1.2mln barrels a day.
Less oil in the market should mean higher prices.
Wall Street stocks finished last week with another round of record highs as the sharp rally triggered by Donald Trump’s surprise presidential victory showed no signs of easing.
The S&P 500 market bellwether rose 0.6% to finish at a record closing high of 2,259.53, pulling off its sixth straight day of gains. That marks the index’s longest winning streak in two and half years. For the week, it is up 3%, its biggest weekly swing higher since mid-November.
The Dow Jones Industrial Average and Nasdaq Composite similarly closed at historic highs and gained 3% and 3.6% for the week, respectively. The small-cap focused Russell 2000 ended edged 0.1% higher to 1388, yet managed to clock in a 5.6% weekly gain.
In company news and staying with oil, shares in ExxonMobil (NYSE:XOM) will be in focus as CEO Rex Tillerson could be nominated as Secretary of State in Trump's administration say reports. Pre-market the shares were up on the oil supply news at $90.09, up 1.2%.
Boeing (NYSE:BA) stock could see extra action Monday after the aircraft maker finalized its agreement to sell 80 airplanes to Iran Air, despite staunch opposition from many US lawmakers.
Iran Air will get 50 737 airplanes and 30 777s, the first of which will be delivered in 2018. The deal was originally signed in June.
Boeing shares were down 0.9% at $155.11 pre-market.