Dow Closes Nearly Flat, Nasdaq Firmly In Negative Territory - U.S. Commentary

(RTTNews) - Stocks saw some volatility over the course of the trading session on Wednesday as traders reacted to news of OPEC's agreement to cut oil production.

While the Dow reached a record intraday high early in the session, the index pulled back near the unchanged as the day progressed before closing up just 1.98 points or less than a tenth of a percent at 19,123.58.

The S&P 500 also reached a record intraday high but turned lower and ended the day down 5.85 points or 0.3 percent at 2,198.81. The tech-heavy Nasdaq slid more firmly into negative territory, slumping 56.24 points or 1.1 percent to 5,323.68.

The volatility on the day came amid a substantial increase by the price of crude oil, which shot up on news of OPEC's agreement to cut production.

Crude oil for January delivery spiked $4.21 to $49.44 a barrel after plummeting $1.85 to $45.23 a barrel in the previous session.

The substantial increase by the price of crude oil came as OPEC ministers revealed the cartel has agreed to reduce production by about 1.2 million barrels to 32.5 million barrels a day.

The agreement marks the first time since 2008 that OPEC has agreed to curtail production and comes as a supply glut has weighed on prices.

On the U.S. economic front, payroll processor ADP released a report before the start of trading showing stronger than expected private sector job growth in November.

ADP said private sector employment jumped by 216,000 jobs in November following a downwardly revised increase of 119,000 jobs in October.

Economists had expected employment to climb by about 160,000 jobs compared to the addition of 147,000 jobs originally reported for the previous month.

A separate report from the Commerce Department showed that personal income rose by more than expected in October, although the report also said personal spending increased less than anticipated.

The National Association of Realtors also released a report showing a slight uptick in pending home sales in October. NAR said its pending home sales index inched up by 0.1 percent.

Late in the day, the Federal Reserve's Beige Book said the economy continued to expand across most regions from early October through mid-November.

Sector News

Benefiting from the sharp increase by the price of crude oil, energy stocks showed a substantial move to the upside on the day.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index soared by 9.4 percent, the NYSE Arc Natural Gas Index shot up by 6.2 percent and the NYSE Arca Oil & Gas Index jumped by 5.5 percent.

Significant strength was also visible among banking stocks, as reflected by the 2 percent gain posted by the Dow Jones Banks Index. With the gain, the index reached an eight-year closing high.

On the other hand, utilities stocks came under considerable selling pressure, dragging the Dow Jones Utilities Average down by 3.3 percent. The weakness in the sector may have reflected concerns about higher interest rates.

Biotechnology stocks also moved sharply lower on the day, resulting in a 2.8 percent drop by the NYSE Arca Biotechnology Index. Gold, housing, telecom, and software stocks also saw notable weakness.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another performance on Wednesday. China's Shanghai Composite Index slumped by 1 percent, while Japan's Nikkei 225 Index closed just above the unchanged line and Hong Kong's Hang Seng Index rose by 0.2 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index climbed by 0.6 percent, the U.K.'s FTSE 100 Index and the German DAX Index both edged up by 0.2 percent.

In the bond market, treasuries pulled back after moving higher over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.6 basis points to 2.368 percent.

Looking Ahead

Another batch of economic data is scheduled to be released on Thursday, with traders likely keep an eye on reports on weekly jobless claims, manufacturing activity, and construction spending.