Energy Sector Leads Stock Market Rebound

The very same event which brought Tuesday’s stock market swoon – the imminent military strike on Syria – caused the energy sector to lead a rebound on Wednesday. Anxiety over the Syrian situation has been sending oil prices higher and as a result, the Energy Select SPDR ETF (XLE) jumped 1.66 percent on Wednesday.

The retail sector had a good day as jewelry retailer, Zale (ZLC) beat earnings expectations and watched its share price skyrocket 29.80 percent. Express (EXPR) also beat its earnings estimate and raised its profit forecast, sending the stock 6.57 percent higher. The SPDR S&P Retail ETF (XRT) advanced 0.56 percent by the closing bell.

The Dow Jones Industrial Average (DIA) picked up 48 points to finish Wednesday’s trading session at 14,824 for a 0.33 percent advance. The S&P 500 (SPY) rose 0.27 percent to close at 1,634.

The Nasdaq 100 (NASDAQ:QQQ) advanced 0.41 percent to finish at 3,072. The Russell 2000 (IWM) rose 0.30 percent to end the day at 1,016.

In other major markets, oil (USO) climbed 0.57 percent to close at $39.09.

On London’s ICE Futures Europe Exchange, October futures for Brent crude oil rose by $1.59 (1.39 percent) to $115.95/bbl. (BNO).

December gold futures declined by $2.70 (0.19 percent) to $1,417.50 per ounce (GLD).

Transports backed over a new Corvette during Wednesday’s session, with the Dow Jones Transportation Average (IYT) retreating 0.07 percent.

In Japan, stocks fell as the yen strengthened to 96.82 per dollar during Wednesday’s trading session in Tokyo. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (FXY). Anxiety over the situation in Syria helped intensify the decline. The Nikkei 225 Stock Average sank 1.51 percent to 13,338 (EWJ).

In China, stocks declined after the official Xinhua News Agency reported that the nation’s consumption tax will include more luxury items and the tax will be increased on products which increase pollution or consume large amounts of energy. The Shanghai Composite Index declined 0.11 percent to 2,101 (FXI). Hong Kong’s Hang Seng Index sank 1.60 percent to end the session at 21,524 (EWH).

European stocks had another bad day on Wednesday (VGK). The threat of a military strike on Syria raised many concerns among investors, although the most recent source of anxiety involved the situation’s impact on oil prices. Europeans have been paying more for petroleum products since the situation in Egypt intensified. Now that Syria is heating up, oil prices have surged higher. The result has been lower stock prices from the consumer sector to airlines. Both Air France-KLM Group and Lufthansa AG saw their share prices fall approximately 3 percent on Wednesday.

The Euro STOXX 50 Index finished Wednesday’s session with a 0.24 percent decline to 2,742 – remaining above its 50-day moving average of 2,720. Its Relative Strength Index is 42.64 (FEZ).

Technical indicators revealed that the S&P 500 remained stuck below its 50-day moving average of 1,659 after finishing Wednesday’s session with a 0.27 percent advance to 1,634. At this point, a head-and-shoulders pattern has now formed on the S&P chart, from the period beginning in early May through the present. (There already had been a pinhead-and-shoulders pattern running from the period beginning on July 10 through August 16.) Its Relative Strength Index rose from 35.14 to 37.44. The MACD is below the zero line as well as the signal line, suggesting a decline.

For Wednesday, all sectors were in positive territory except for the materials sector and the consumer staples sector which fell 0.19 percent and 0.75 percent, respectively. The energy sector led the group, with a gain of 1.66 percent.

Consumer Discretionary (XLY): +0.54%

Technology: (XLK): +0.06%

Industrials (XLI): +0.09%

Materials: (XLB): -0.19%

Energy (XLE): +1.66%

Financials: (XLF): +0.18%

Utilities (XLU): +0.35%

Health Care: (XLV): +0.43%

Consumer Staples (XLP): -0.75%

Bottom line: After anxiety over the Syrian situation sank stocks on Tuesday, the rise in oil prices resulting from that anxiety caused the energy sector to lead a stock market rebound on Wednesday.

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