Wall Street Ends Without Direction

Wall Street Ends Without Direction

Those were the words of Mace Blicksilver of Marblehead Asset Management when he described the proceedings of last week at the U.S. stock market.

Wall Street ended Monday without direction, remaining near record levels reached on Friday despite falling energy sector destabilized by the plunge in oil prices: the Dow Jones yielded 0.14% but the Nasdaq gained 0.18%.

According to the results at the close, the Dow Jones Industrial Average fell 24.28 points to 17,366.24 points, while the Nasdaq advanced 8.17 points to 4638.91 points.

The broader S& P500 dropped 0.01% or 0.24 points to 2017.81 points.

“It is not unusual to see small break indices after summits,” noted Michael James of Wedbush Securities. The stars Dow Jones and S & P 500 had come to new levels on Friday.

And “given the underperformance against the energy sector after the fall of nearly $2 WTI, the market is very well maintained,” found Mr. James.

Declining since mid-June as London Brent, oil prices listed in New York (WTI) finished at their lowest since the end of June 2012. Monday sealed by the rise of the dollar and fears about abundance of the offer.

US oil majors like ExxonMobil and Chevron have been hit hard “as a large part of the raw materials sector, affected by the rising dollar,” which made it more expensive to export products, noted Mace Blicksilver of Marblehead Asset Management, whereas “the energy sector weighs heavy, representing between 10% and 12% S&P 500,” said Michael James.

On the other hand, traders digested a series of halftone indicators worldwide.  In the United States, if the activity in the manufacturing sector rose more than expected in October, real estate and construction spending fell in September for the second consecutive month, surprising analysts who had forecast a rebound.

Across the Atlantic, the manufacturing sector in the euro zone continued to stagnate in October, and China, the PMI activity index released by HSBC showed that growth of manufacturing production has been limited.

Investors also addressed the parliamentary elections Midterm Tuesday the United States with caution. “In Washington, they rather anticipate a Republican victory in the Senate, which would be welcomed by Wall Street hoping to adopt a tone favorable to business,” said Mace Blicksilver. “But nothing is safe and investors remain on their guard,” he added.

Investors hoped that the return of Republican in business will translate into “possible reforms on corporate taxes, the approval of the Keystone XL pipeline, or the revision of the Dodd-Frank Act” on the reform of Wall Street, bringing more autonomy to separate portfolio managers.

The bond market fell. The yield on 10-year Treasury has advanced to 2.348% against 2.335% Friday night, thus reaching its thirty-year high at 3.066% against 3.060%.

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