On Monday, U.S. stocks closed lower earlier gains on lower-than-average volume, as oil futures rallied as well as dollar traded lower against most of its contenders. Investors had been revitalizing for start of Q1 earnings season, which starts unofficially with quarterly results from Alcoa Inc. (NYSE:AA).
The S&P 500 index dropped 5.61 points, to close at 2,041.99, dragged down by consumer-staples and health-care sectors; both dropped 0.7% on day. In earlier session, broad-market benchmark had up been as many as 15 points.
While Dow Jones Industrial Average slummed 20.55 points to settled at 17,556.41, with shares of Nike Inc. (NKE) and Pfizer Inc. (PFE) leading losses. Earlier, blue-chip average had been up 155 points. In the meantime, tech-heavy Nasdaq Composite Index slashed 17.29 points to close at 4,833.40.
The portfolio manager at Kingsview Asset Management, Paul Nolte stated that the fluctuating price action of Monday is probable result of lower-than-average volume, which has tapered off since the February selloff. Nolte added he is struggling to see where purchasing interest is coming in. With volume so low, it’s pretty easy to push prices about.
As per Dow Jones data, year-to-date average daily volume for NYSE Composite is 4.43B shares and for NASDAQ are 2.05B shares. The daily average Month-to-date has been 3.68B for New York Stock Exchange and 1.73B for NASDAQ. By close Monday, NYSE stood at 3.38B shares and NASDAQ stood at 1.53B shares traded.
A rally in crude-oil futures had boosted the main benchmarks earlier in the session, following a recent trend of strong correlation among oil and stock prices, but that unwound notably in the final hour of trading and stocks ventured into negative territory.
The chief market economist at First Standard Financial, Peter Cardillo stated that Oil remained the “key market driver” on Monday, as firmer oil prices were “trumping the prospects of a poor earnings season, together with absence of major economic reports recently.
A increase in gold prices boosted stocks of gold miners, like Kinross Gold Corp. and AngloGold Ashanti Ltd. Gold continued to advance after enjoying its best weekly gain in three weeks on Friday. The dollar recovering against the Japanese yen also helped stocks earlier, but that trend reversed over the course of the session. The yen has recently been at the center of equity selloffs, as yen strength has fueled risk aversion. The Japanese currency is perceived as a haven in times of global economic worries.
John Manley, chief equity strategist at Wells Fargo Advantage Funds, called the dollar-yen relationship a “market mosquito bite.”
“Sometimes a mosquito bite can really grab your attention. But in the long run, the dollar-yen will correct just not in a straight line,” Manley stated, adding that the impact on equities and risk aversion could become bigger in the short term if the Bank of Japan steps in to weaken its currency by flooding market with yen.