Despite continued pressure in the oil market, U.S. equities rallied on Wednesday, sending the energy sector higher.
The Dow Jones Industrial Average was up 82 points, or 0.47% to 17575. The S&P 500 gained 4 points, or 0.23% to 2052, while the Nasdaq Composite added 23 points, or 0.44% to 5045.
After what has so-far been a volatile week in global markets thanks to a steep and steady decline in oil prices, traders in the U.S. shifted their focus back stateside to a raft of economic data ahead.
Investors parsed two reports from the Labor Department on Thursday. The first showed import and export prices both declined last month. Import prices fell 0.4%, a shallower drop than the 0.7% dip expected. Export prices, though, declined 0.6%, more than the 0.3% dip forecasted.
Meanwhile, weekly jobless claims came in slightly higher than expected. The number of Americans filing first-time claims for unemployment benefits rose last week to 282,000 from an unrevised 269,000 the week prior. Wall Street expected a reading of 269,000.
“Jobless claims remain a bright spot for the economy as they continue to hoover near a four-decade low,” Deutsche Bank’s U.S. economics team wrote in a note. “Consequently, we can be confident that with economy-wide layoff low, the good health of the labor market will remain intact.”
On tap Friday are consumer-level reports including retail sales and consumer sentiment, as well as the latest reading on prices at the wholesale level.
The data are being closely watched ahead of next week’s Federal Open Market Committee meeting at which Wall Street expects central bankers to vote to raise short term interest rates by a quarter of a percent from historic lows.
In recent action, the yield on the benchmark 10-year U.S. Treasury bond added 0.023 percentage point to 2.231%, while the U.S. dollar rose against a basket of global currencies.
Meanwhile, investors continued to monitor global oil prices as they sunk to a fresh seven-year low on Thursday, its fifth down day, and the longest losing streak so far in five months. The sharp declines come on the heels of renewed concerns about production levels that haven’t slowed as global supply continues to build. Last week OPEC opted not to cut its production levels despite some resistance from member nations that wanted to see some of the pricing pressure alleviated in the near-term.
In recent action, West Texas Intermediate crude dropped 1.08% to $36.76 a barrel, while Brent slid 0.95% to $39.73.
Sam Stovall, U.S. equity strategist at S&P Capital IQ, said oil’s effect on the overall market has been significant. He cited data from S&P Dow Jones Indices, which showed year to date, through December 8, the S&P 500 is up 0.2%, while the energy sector has dumped 23.3%.
“Excluding energy…the S&P 500 would have been up 2.4%,” he said in a note. “Similarly, 3Q 2015 preliminary capital expenditures for the S&P 500 show a year-over-year decline of 1.6%. Excluding energy’s 35% slump, however, the S&P 500’s expenditures would be up 15.6%.”
Further, Peter Kenny, independent market strategist, said a year-end Santa Claus rally looks increasingly less likely thanks to the drastic move lower in crude.
“The market has repeatedly disappointed in recent sessions as a result of the crude-oil narrative – a narrative that clearly few were expected – including many inside of OPEC apparently,” he said. “The fact is the Nasdaq is less than 5% off its high and given the meteoric rise that took place in October, our recent volatility is not entirely unexpected.
Elsewhere in commodities, metals were mixed as gold shed 0.42% to $1,073 a troy ounce. Silver declined 0.56% to $14.09 an ounce, while copper gained 0.24% to $2.07 a pound.