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MZ Closing Market Update Tuesday, February 23, 2016

  • U.S. stocks closed lower Tuesday, as hopes of an oil production cut were dashed and after a miss in the consumer confidence index.
  • "I think today it was high hopes around the oil minister. … Plus you were at key technical levels in both oil and the S&P," said John Canally, chief economic strategist at LPL Financial.
  • Saudi Oil Minister Ali al-Naimi said Tuesday at the CERAWeek energy conference that production cuts won‘t happen, although producers will hopefully meet in March to negotiate an output freeze.
  • "I think the market now wants to see a cut. The markets are looking for that next step — well you froze production, let‘s cut it," Canally said.
  • Energy traded about 3 percent lower to lead S&P 500 decliners. The S&P failed to break a resistance level of 1,950 during Monday‘s rally.
  • The Dow Jones industrial average briefly traded more than 200 points lower, as declines in Goldman Sachs, Chevron and JPMorgan Chase weighed. JPMorgan holds its investor day Tuesday and its investment banking chief said first-quarter revenues in investment banking fees are down 25 percent, year-over-year.
  • "I think obviously the price of oil is giving back part of its gains but I think the fall in consumer confidence is dampening investors‘ enthusiasm," said Peter Cardillo, chief market economist at First Standard Financial.
  • Lynn Franco, the economist at The Conference Board who compiled the report, said the decline in consumer confidence in February was due mostly to recent financial market volatility. "There‘s nothing coming out of this report that suggests consumers see the economy slowing or derailing," she said.
  • U.S. crude oil futures for April delivery settled down $1.52, or 4.55 percent, at $31.87 a barrel, below Monday‘s closing price of $33.39 a barrel but a touch above the final price on the March contract of $31.48 a barrel. The March contract rolled to April after the settle Monday.
  • "We had a pretty good amount of economic data last week, the majority of which was pretty positive, which I think helped push the market higher, but primarily it‘s oil doing it," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
  • On the data front, the S&P/Case-Shiller 20-city composite home price index showed a 5.7 percent increase year-over-year in December.
  • U.S. home resales unexpectedly rose in January, reaching a six-month high, in the latest sign that the economy remains on firmer ground despite slowing global growth and tightening financial market conditions, Reuters said.
  • Treasury yields held lower, with the 2-year yield at 0.73 percent and the 10-year yield at 1.74 percent as of 2:48 p.m. ET.
  • The U.S. dollar traded a touch higher against major world currencies, with the euro at $1.102 after briefly dipping below to hit a near-three-week low against the dollar. The yen traded at 112.08 yen against the greenback.
  • The Chinese yuan midpoint fix was weaker against the dollar Tuesday at 6.5273 versus 6.5165 Monday, for the biggest cut in six weeks, according to StreetAccount.
  • Asian equities closed slightly lower, while European stocks were more than 1 percent lower as low oil prices weighed.

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Last Update on February 23, 2016