Stock Market News For August 09, 2016

Despite strong crude rally, major benchmarks closed in the red on Monday on the back of declines in healthcare stocks. Declines in healthcare giants like Bristol-Myers and Merck (NYSE:MRK) offset gains in energy stocks on the back of rising speculations of crude output freeze next month. OPEC President Mohammed bin Saleh al-Sada said that OPEC countries may discuss to stabilize crude output, which resulted oil prices to increase.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) decreased 0.1%, to close at 18,529.29. The S&P 500 also fell 0.1% to close at 2,180.89. The tech-laden Nasdaq Composite Index closed at 5,213.14, losing 0.2%. The fear-gauge CBOE Volatility Index (VIX) increased 1% to settle at 11.50. A total of around 3.3 billion shares were traded on Monday on the NYSE. Advancers outpaced declining stocks on the NYSE. For 54% stocks that advanced, 42% declined.

Bristol-Myers Squibb Company (BMY) registered declines for the second straight session after it lung cancer drug Opdivo failed to meet targets in a recent late-stage study. Bristol-Myers Squibb’s shares fell 4.7%, becoming the worst performing company among the S&P 500. Shares of Dow component, Merck & Co., Inc (MRK), which makes rival drug, also declined 1.6%.

Separately, Allergan (NYSE:AGN_pa) plc’s (AGN) shares slumped 2.2% after reporting second quarter revenues of $3.68 billion, missing the Zacks Consensus Estimate of $4.14 billion. However, its quarterly earnings of $3.35 per share were above the Zacks Consensus Estimate of $3.28 per share.

Declines in Bristol-Myers, Merck and Allergan led the Health Care Select Sector SPDR ETF (NYSE:XLV) to fall 0.9%, becoming the biggest decliner among the S&P 500 sectors. Key stocks from the sector including Amgen Inc (NASDAQ:AMGN). (AMGN), Celgene Corporation (NASDAQ:CELG) ( CELG), Patterson Companies (NASDAQ:PDCO), Inc. (PDCO) and Gilead Sciences Inc (NASDAQ:GILD). (GILD) decreased 0.8%, 1.6%, 3.7% and 0.8%, respectively. Other Dow components Pfizer Inc. (NYSE:PFE) (PFE) and Johnson & Johnson (NYSE:JNJ) (JNJ) fell 1.4% and 0.5%, respectively. The iShares Nasdaq Biotechnology ETF (IBB) declined 1.1%.

However, oil prices increased yesterday following reports that OPEC members along with non-OPEC members like Russia will meet in a conference in September. OPEC President Mohammed bin Saleh al-Sada said that OPEC is monitoring recent developments and aims to “help restore stability and order to the oil market.” He also expected global demand to increase in the last two quarters this year, “coupled with decrease in availability.”

Dr. Sada’s encouraging statements raised speculations of a possible production freeze, which in turn resulted in an oil prices rally. Both WTI and Brent crude rose 2.8% and 2.5% to $43.02 a barrel and $45.39 per barrel, respectively.

Increase in oil prices led the Energy Select Sector SPDR (XLE (NYSE:XLE)) to increase 1.3%, becoming biggest gainer among the S&P 500. Key energy stocks including, Tesoro Corporation (NYSE:TSO) (TSO), ConocoPhillips (NYSE:COP) ( COP), Marathon Oil Corporation (NYSE:MRO) (MRO), National Oilwell Varco (NYSE:NOV), Inc. (NOV) and Schlumberger Limited (SLB) increased 3.7%, 2.4%, 2.7%, 3.2% and 1.6%, respectively. Dow components Exxon Mobil Corporation (NYSE:XOM) ( XOM) and Chevron Corporation (NYSE:CVX) (CVX) advanced 1.2% and 0.7%, respectively.