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US shares fall on day, but fall flat on the month

Last updated: 16:28 31 Aug 2016 EDT, First published: 11:28 31 Aug 2016 EDT

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US shares closed Wednesday lower but unchanged on the month, after lower oil prices once again hurt the bourse while worries that job creation will lead to higher interest rates also provided jitters.

The S&P 500 index closed the day down 0.24% at 2,170 but that was bang in line with the close on August 1. To be precise, it ended August 31 at 2,170.95 while it closed on August 1 at 2,170.84.

The S&P Midcap 400 was down 0.3% at 1,564, around 10 points higher than where it closed on August 1, while the S&P Smallcap 600 was down 0.5% at 753 – also up 10 points from a month ago.

The S&P 500 energy sector dropped 1.1 per cent in recent trading, making it the worst performer on the benchmark S&P 500 index.

The US oil benchmark WTI was down 3.3% at $44.81.

The move lower accelerated after the US government said that crude inventories rose by a substantially wider than expected margin last week, while a draw in gasoline stocks was slimmer than forecast.

Oil prices have been pressured in recent weeks by a rise in the greenback, which impacts the commodity since it is denominated in dollars. Analysts have also remained concerned that a rebound in the WTI price from the mid-$20 a barrel range in February to the $40s more recently may prompt more American drillers to bring rigs back online, again exacerbating a glut of supply.

Talk about the potential for Opec to agree to a production freeze after a meeting in September had helped to ease supply concerns, but investors have remained skittish given the repeated failures of such discussions.

On Wednesday, two major oil economies laid bare the consequences of low global oil prices. Nigeria was officially in recession while Norway, whose economy was broadly flat in the second quarter, may now have to raised its long-accumulated sovereign wealth fund for the first time ever. Read more.

Meanwhile, the private sector ADP jobs numbers, although no longer an accurate gauge of the US non-farm payrolls which are due on Friday, nevertheless piled on the pressure when they again delivered buoyant growth.

Anything that can fuel the suspicion that Friday’s numbers will be strong is unwelcome on Wall Street right now, after last week the Federal Reserve chair Janet Yellen and her deputy Stanley Fischer implied that the next non-farm payrolls could be a test for whether rates are hiked as soon as at the FOMC meeting on September 21.


Midsession

US stocks were lower at midsession on Wednesday after oil prices sank by 3% as two oil economies paid the price of a climate of depressed energy revenues.

The market bellwether S&P 500 index was down 0.6% to 2,163. Among its top decliners was Murphy Oil Corp (NYSE:MUR), down 4.3% to $27.10.

The S&P Midcap 400 was down 0.7% at 1,559, with Denbury Resources (NYSE:DNR) among the top decliners of 2.9% to $3.01.

The S&P Smallcap 600 was down 0.9% to 749 with decliners including Bonanza Creek Energy Inc (NYSE:BCEI) down 7.3% to $1.02.

Oil exporters got a wake-up call to the effects of lowly oil prices. OPEC member Nigeria’s economy slumped into recession while Norway’s stalled in the second quarter, data showed on Wednesday.

Oil has recovered from February's low of just over $26 per barrel but the current price of about $46 is still less than half what producers were getting just two years ago.

The West Texas Intermediate, the US oil price gauge, was down 3.4% at $44.76.


US open

US stocks opened lower, weighed down by lower oil prices while private jobs numbers from ADP came in better than expected and fuelled worries over higher interest rates.

Companies added 177,000 positions in the month, which was just above Wall Street expectations for 175,000.

The Dow Jones Industrial Average shed 69 at 18,385, the S&P eased nine to 2,167 while Nasdaq was 17 points lower at 5,206.

The ADP number is no longer seen as a reliable guide to the non-farm payrolls due later this week, but that it was close to estimates and the market is worried a strong jobs number will spur the US Federal reserve to raise interest rates.

Oil stocks were weak as Chevron and Exxon Mobil tumbled on a weak oil price and US inventories came in higher than expected.


US preview

US stocks are seen opening lower as traders await the non-farm job creation numbers at the end of the week and the oil price is on the slide.

The jobs data will be closely scrutinised as it could signal the timing of the next Fed rate hike.

The general mood is that Fed chair Janet Yellen will raise interest rates on September 21 at a time when the majority of the rest of the Central Banks are pursuing stimulus measures amid stagnant growth.

And the ADP private payroll data is already out. This is largely seen as a precursor to Friday's report.

Companies added 177,000 positions in the month, which was just above Wall Street expectations for 175,000.

On Wall Street, the Dow closed down 48 at 18, 454.

The S&P500 closed down 4.26% to 2,176, while the tech heavy Nasdaq lost 9.3 points at 5,222. The S&P Midcap 400 shed 0.1% to 1,568. The S&P Smallcap 600 posted a flat end at 755.

In futures trading today, the S&0500 is down three points; the Nasdaq is down 6.5 and the Dow Jones Industrial Index is 29 points lower.

Apple (NASDAQ:AAPL) shares nudged 0.6% lower in pre-market after yesterday's ruling by the European Commission, ordering the Irish gov't to get US$14.5 billion plus interest in taxes from Apple. Ireland and the tech giant have said they will appeal.

US crude is 0.91% lower, at US$45.91 a barrel.

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