- Crude oil rises 2.5% after inventory report, boosting energy
- Investors set to scour Fed statement for clues on rate moves
The Standard & Poor’s 500 Index advanced after falling as much as 0.9 percent, with energy shares leading gains as crude surged above $32 a barrel. Equities slid earlier after disappointing results from Apple Inc. and Boeing Co. signaled slowing global growth is weighing on corporate America. Data showed sales of new homes in the U.S. rose more than forecast in the last report on the economy before the Fed’s 2 p.m. decision in Washington.
This year’s 17 percent decline in the price of crude has contributed to market upheaval that’s dragged down equities, curbed corporate debt issuance and caused traders to lower their bets on how fast the Fed will move. Investors will scour the U.S. central bank’s Wednesday statement to see whether the violent price swings on global financial markets will cause it to reconsider plans to hike interest rates four times in 2016.
The S&P 500 added 0.3 percent at 11:55 a.m. in New York, while the Nasdaq 100 Index lost 0.7 percent. The broader index is headed for a January loss of more than 6.5 percent, as anxiety about global growth, fueled by China’s slowdown and a rout in oil, has wiped as much as $2.4 trillion from the value of U.S. equities this year.
Energy shares jumped 1.4 percent on the oil rebound, while financial shares climbed 1 percent, adding to a rally on Tuesday.
Apple, the world’s most valuable company, was the biggest drag on both indexes. It dropped 5 percent after forecasting its first sales decline since 2003. Suppliers to Apple and the smartphone sector also retreated, with losses at ARM Holdings Plc, Dialog Semiconductor Plc and AMS AG.
Boeing tumbled 9.2 percent, headed for its worst drop since 2001, after the planemaker said profit this year would miss analyst estimates by more than a dollar a share as it delivers fewer jetliners, fueling concerns that revenue growth may be hampered by a saturated market and a sluggish global economy.
The earnings season is in full swing, with at least 32 S&P 500 companies reporting today, including Facebook Inc., PayPal Holdings Inc. and EBay Inc. Even as the pace of the reporting season picks up, equity investors have remained fixated on the direction of oil prices. The S&P 500 has moved in virtual lockstep with oil, with their relationship reaching the tightest since 2011.
The Stoxx Europe 600 Index slipped 0.5 percent. The index is heading for a monthly decline of 8 percent. A measure of volatility in the market has risen 30 percent in January.
WTI futures fell 2.6 percent to $30.64 a barrel. Inventories surged by 11.4 million barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show supplies rose for a third week.
Independent American oil explorers are forecast to report 2015 losses totaling almost $14 billion amid the collapse in energy prices, according to data compiled by Bloomberg. Hess Corp. reported its first annual loss in 13 years as it cut spending to weather a prolonged slump in oil prices.
The yield on U.S. 10-year Treasury notes climbed three basis points to 2.02 percent, with the nation due to sell $35 billion of five-year notes on Wednesday. After January’s 1.9 percent rally in Treasuries, bond bulls are watching for signs that Fed officials expect this year’s oil-price plunge to damp inflation, or any mention of tightening financial conditions resulting from tumult in global stocks and higher-yielding debt.
Even before the January turmoil, fed funds futures were pricing in just two rate increases by year-end. That’s shrunk to about one, and traders see a one-in-four chance the Fed will raise rates at its meeting in March, down from 51 percent at the start of this year, data compiled by Bloomberg show.
Global corporate bond sales are set for the worst January since 2005, with companies having only issued about $329 billion of debt, according to data compiled by Bloomberg. That’s even after Anheuser-Busch InBev NV held the second-largest dollar-denominated sale on record, raising $46 billion to fund the takeover of SABMiller Plc.
Italy’s government bonds rose for a third day after the nation reached an agreement with the European Commission on a rescue deal that will help banks offload bad debt. Italian 10-year bond yields approached their lowest in eight weeks after the plan, which was initially blocked for months by the Commission, was passed on Tuesday.
The Bloomberg Dollar Spot Index rose 0.2 percent, erasing earlier gains after the data showed employment gains and attractive mortgage rates combined to push new-home sales in the U.S. forward for a fourth straight year. Sustained hiring and income growth would provide further impetus for the market, encouraging more construction and contributing to the economy.
Australia’s dollar strengthened 0.5 percent to 70.43 U.S. cents. The nation’s trimmed mean inflation measure increased 0.6 percent last quarter from the prior three months, topping the median analyst forecast for a 0.5 percent increase.
Malaysia’s ringgit climbed to a seven-week high as Prime Minister Najib Razak was cleared in a corruption probe. The currency jumped 0.9 percent in its fourth day of gains, the longest rally since September.
The MSCI Emerging Markets Index rose 0.9 percent as equity benchmarks in Russia and South Korea jumped at least 1.4 percent. Gulf shares rebounded, with Saudi Arabia’s Tadawul All Share Index rising 1.1 percent and Dubai’s DFM General Index climbing 2 percent.
The Shanghai Composite Index lost as much as 4.1 percent, before ending the day 0.5 percent down. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong advanced 0.8 percent.
Data on Wednesday showed China’s industrial profits slid 4.7 percent last month, accelerating from the previous month’s 1.4 percent loss. Strategists and technical analysts point to the growth slowdown as the reason why the Shanghai Composite may keep falling until it levels off around the 2,500 level.