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Stock Market News For Nov 14, 2018

Zacks Equity Research
Berkshire Hathaway's (BRK.B) reorganization of portfolio reflects prudent use of its float.

Wall Street ended mostly lower on Tuesday as crude oil prices continued their downward journey. U.S. stocks were regaining grounds from previous day’s mayhem in the initial hours of trading following some positive news on trade war front. However, the enthusiasm was short-lived as no concrete news appeared from trade front along with further sliding of crude oil prices. The Dow and S&P 500 closed in the red while Nasdaq Composite remained flat.

The Dow Jones Industrial Average (DJI) closed at 25,286.49, shedding 0.4% or 100.69 points. The S&P 500 Index (INX) declined 0.2% to close at 2,722.18. However, the Nasdaq Composite Index (IXIC) closed at 7,200.88, adding just 1 point. A total of 8.2 billion shares were traded on Tuesday, lower than the last 20-session average of 8.4 billion shares. Decliners outnumbered advancers on the NYSE by 1.08-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.05-to-1 ratio.  The CBOE VIX increased 3.9% to close at 21.24.  

How Did the Benchmarks Perform?

The Dow ended in negative territory for the third straight day. Notably, 18 components of the 30-stock blue-chip index closed in the red while 11 finished in the green and the remaining one was unchanged. The tech-laden Nasdaq Composite closed as essentially flat compared with the previous day’s closing, reversing its three days losing streak due to good performance of chip makers.

Meanwhile, the S&P 500 also closed in the red for fourth consecutive days after registering its lowest closing since Oct 31. Energy Select Sector SPDR (XLE) is the major loser dropping 2.3%. Notably, six out of total 11 sectors of the benchmark index closed in the red while five finished in the green.

Free Fall of Crude Oil Prices

On Nov 13, the U.S. benchmark West Texas Intermediate (WTI) crude oil future price for December delivery fell $4.24 or 7.1% to settle at $55.69 a barrel on the New York Mercantile Exchange. Thiswas the lowest front-month contract finish since Nov 16, 2017 and biggest one-day percentage decline since September 2015. Moreover, this was the twelfth straight loss for WTI crude prices, the longest slide since March 1983.

Notably, on Nov 8, WTI Crude oil entered into bear market as price tumbled more than 20% from its recent peak recorded at Oct 3. On Nov 13, the global benchmark of Brent Crude oil prices fell$4.65 or 6.6% to settle at $65.47 a barrel on ICE Futures Europe. With this, the Brent crude oil has also entered bear market after tumbling nearly 24% from its recent peak in October.

Recent nosedive of crude prices has raised eyebrows about an impending global economic slowdown. According to industry researchers, surge in global oil supply and significantly weak global demand for oil is the reason for oil price plunge.

Precipitous decline of crude oil prices further intensified following a tweet by President Trump on Tuesday stating that he is hopeful that “Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!”.

U.S. - China Trade Talk Remains Inconclusive

On Nov 13 morning, The Wall Street Journal reported that the U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He talked to each other on Nov 9 in order to prepare ground for a meeting between President Donald Trump and his Chinese counterpart Xi Jinping later this month in G-20 summit in Buenos Aires, Argentina. Later, White House economic advisor Larry Kudlow confirmed the report.

However, neither of the two countries has given any sort of positive news regarding an amicable solution to the eight-month old tariff related conflicts. The Trump administration has raised serious questions about the trade practices of China related to intellectual property rights of high-tech patents.

An inconclusive trade negotiation between the United States and China has negative effect on trade-sensitive stocks. Shares of Apple Inc. AAPL declined 1.9% after sliding 5% yesterday. Notably, various component suppliers have hinted for lower sales to the company raising eyebrows of several market participants regarding future prospects of iPhone and iPADs. Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks That Made Headlines

Pioneer Divests Pumping Assets, Inks Long-Term Deal

Pioneer Natural Resources Company PXD has inked an agreement with oilfield service provider ProPetro Holding Corp. (Read More)

HollyFrontier to Buy Sonneborn, Rev Up Lubricants Unit

In a bid to bolster the Lubricants and Specialty Products business, HollyFrontier Corp. HFC recently inked a $655 million all-cash deal to acquire Sonneborn. (Read More)

Baker Hughes, General Electric May Accelerate Parting Process

Baker Hughes, a GE company BHGE announced that 92 million of its class A common shares will be sold by General Electric Company GE in a secondary offering. (Read More)

BD's FDA Nod for Phoenix Test Boosts Diagnostic Systems

Becton, Dickinson and Co. BDX, also known as BD, recently announced the FDA 510(k) clearance of its Phoenix CPO detect test. (Read More)

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