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S&P 500 hits all-time high, oil turns positive

Published 07/11/2016, 09:32 AM
Updated 07/11/2016, 09:46 AM
© Reuters.  S&P 500 marks new record high at the open
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Investing.com – The S&P 500 hit an all-time high soon after Monday’s open by breaking above the prior May 20, 2015 record of 2,134.72 points, while oil staged a turnaround in early North American trading.

Specifically, at 13:43GMT or 9:43AM ET, the benchmark index advanced 9 points, or 0.42%, to reach 2,138.80 points.

The new record level was hit as investors continued to buy following last Friday’s spectacular jobs report and while gearing up for the unofficial start of the second quarter (Q2) earnings season with Alcoa reporting after the close on Monday.

The earnings recession was expected to continue for a fourth consecutive quarter with S&P Global Market Intelligence forecasting a 5.2% drop in Q2 earnings from S&P 500 companies, while FactSet estimated that company profit will fall by 5.6% and Thomson Reuters projected a 4.7% decline.

Despite the decrease, most experts pointed out that it would be an improvement from the first quarter, suggesting that the trough may already have been reached in the first three months of the year and the recovery could continue.

With no major economic data to be released on Monday, traders would concentrate on the Federal Reserve (Fed) Bank of Kansas City president Esther George’s speech on the economy scheduled for 14:00GMT, or 10:00AM ET.

George voted against the policy decisions back in March and April, preferring a 25 basis point increase to 0.50%-0.75%, but recanted in the June decision ahead of the U.K.’s referendum on its membership in the European Union.

Whether or not she decides to return to her hawkish stance could help signal a shift in the Fed outlook.

Even after last Friday’s employment report gave indications of a strong labor environment, markets remained skeptical about the odds of a Fed rate hike this year. Fed fund futures put 100% odds on the fact that the U.S. central bank will hold rates steady at the July 26-27 monetary policy meeting and are currently pricing in just a 33% chance of a hike by December.

Risk appetite was also seen in oil markets as oil staged a turnaround in North American trade, after falling to a two-month low overnight amid signs of an ongoing recovery in U.S. drilling activity.

Crude futures on the New York Mercantile Exchange rose 0.24% to $45.52 a barrel by 13:48GMT or 9:48AM ET, while Brent oil traded up 0.11% to $46.81.

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