Stock Market News For September 13, 2016

Benchmarks closed more than 1% higher on Monday after investor concerns about an imminent rate hike ebbed. Federal Reserve Governor Lael Brainard said that it would be wise for the Fed to keep monetary policy loose. Muted inflation and uncertain global developments made her cautious against hiking rates too fast. Two other officials also said that the Fed shouldn’t be in a hurry to raise rates. Meanwhile, a rally in biotechnology shares had a positive impact on the Nasdaq.

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) gained 1.3% or 239.62 points to close at 18,325.07. The S&P 500 advanced 1.5% to close at 2,159.04. The tech-laden Nasdaq Composite Index closed at 5,211.89, increasing 1.7%. The fear-gauge CBOE Volatility Index (VIX) plunged 13.4% to settle at 15.16. A total of around 3.9 billion shares were traded on Monday on the NYSE. Advancers outpaced declining stocks on the NYSE. For 70% stocks that advanced, 27% declined.

Policymakers Remain Cautious

Speaking at the Chicago Council on Global Affairs on Monday, Brainard said that the Fed should be “prudent” with regards to raising interest rates. Since low unemployment rate had failed to boost inflation, she believes that “the case to tighten policy preemptively is less compelling”. She also remained cautious about the difficulties in the global markets and its impact on the U.S. economy.

She added that leaving rates unchanged since December has “served us well in recent months, helping to support continued gains in employment and progress on inflation”. Following Brainard’s speech, chances of a rate hike this month fell to 15% from a previous reading of 24%, according to the CME’s Fed Watch Tool.

Meanwhile, Federal Reserve Bank of Atlanta President Dennis Lockhart said that the current economic scenario warrant a “serious discussion” about rate hike. But he did mention that he didn’t “feel that we are incurring the costs of patience that put a lot of urgency on the question of raising rates.” Minneapolis Fed President also added that when it comes to raising rates “there doesn’t appear to be a huge urgency to do anything, frankly.” Such comments were in contrast to what other Fed officials said last week, which had suggested a earlier than expected rate hike.

Defensive Sectors Gain

Defensive plays such as utilities and consumer staples led the gains on Monday. Lower interest rate environment generally bodes well for such stocks. The Utilities Select Sector SPDR (XLU) gained 1.8%. Key utilities stocks including NextEra Energy (NYSE:NEE), Inc. (NEE) and Duke Energy Corporation (NYSE:DUK) (DUK) increased 2% and 1.7%, respectively. Both these companies possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Consumer Staples Select Sector SPDR (XLP) advanced 1.9%. Key consumer staples stocks including Procter & Gamble Co (PG) and Wal-Mart Stores (NYSE:WMT), Inc. (WMT) both increased 2.3%. Separately, the tech-heavy Nasdaq was boosted by gains in biotech stocks. The iShares NASDAQ Biotechnology Index (IBB) gained 3%.

Stocks that Made Headlines

United Natural Gains on Q4 Earnings Beat, Sales Lag

United Natural Foods, Inc. (UNFI) posted better-than-expected earnings in the fourth quarter of fiscal 2016. (Read More)

Verizon to Buy Sensity Systems, Add LED to IoT Platform

Verizon Communications Inc. (VZ) inked a deal to acquire Sensity Systems Inc., a small Internet of Things (IoT) start-up, based in Sunnyvale, CA. (Read More)

Potash Corp, Agrium in $36 Billion Fertilizer Mega-Merger

Potash Corp. (POT) and Agrium (AGU) have agreed to combine their businesses to create a fertilizer powerhouse with a pro-forma enterprise value of $36 billion. (Read More)

Rockwell Automation (NYSE:ROK) Buys ACP, Expands Product Offerings

Rockwell Automation, Inc. (ROK) recently acquired Alpharetta, GA-based Automation Control Products. (Read More)

Sully Rakes in $35.5M in Opening Weekend for Time Warner

Time Warner Inc.’s (TWX) Warner Bros. biographical drama movie Sully shattered box office records in the previous week. (Read More)

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