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Sept. 17, 2019, 4:43 p.m. EDT

Stock market logs modest gain amid turbulent oil prices and ahead of Fed decision

S&P 500 energy sectors falls 1% as crude oil prices retreat from historic surge

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By Mark DeCambre and Chris Matthews, MarketWatch

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U.S. stocks finished Tuesday’s session with modest gains on the back of defensive bets, as investors focused on a decision on interest rates from the Federal Reserve set for Wednesday after a weekend attack in the Middle East that has roiled global energy markets.

How are major benchmarks faring?

The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.07% gained 33.98 points, or 0.1%, to close at 27,110.80, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.48% rose 7.74 points, or 0.3%, to end at 3,005.70, supported by gains in real estate, up 1.3% and utilities, up 0.9%—sectors considered defensive.

The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +1.29% advanced 32.47 points, or 0.4%, to 8,186.02.

On Monday, the Dow fell 142.7 points, or 0.5%, to close at 27,076.82, ending an eight-day winning streak. The S&P 500 index shed 9.43 points, or 0.3%, to finish at 2,997.96, while the Nasdaq Composite Index dropped 23.17 points, or 0.3%, to end at 8,153.54.

What’s driving the market?

Wall Street attempted to shake off an oil “supply shock” that has rattled investor confidence days ahead of a policy decision by the Federal Reserve which is pondering the impact of the US. - China trade war.

Saudi Arabia, the biggest producer of oil in the world, said it’s crude-processing operations would return to normal as soon as the end of the month after a coordinated weekend attack on its energy infrastructure on Saturday knocked out an estimated 5.7 million barrels a day in production, representing 5% of the world’s global output.

Saudi energy minister Prince Abdulaziz bin Salman said Tuesday that Saudi Aramco has already restored 50% of lost production since the attacks. The Wall Street Journal reported that the facility is already supplying customers at pre-attack levels.

Tensions in the Middle East have been running high after the shutdown of oil-processing hubs in Riyadh, leading to the biggest single-day disruption in the crude oil market in its history and a record surge for oil futures.

The events have increased fears of conflict between Iran and the U.S., with Iran’s Ayatollah Ali Khamenei saying that he won’t negotiate with the U.S., which has maintained sanctions against Iranian oil exports since Trump last year pulled out of a pact limiting Tehran’s nuclear ambitions even though the country was largely in compliance.

President Donald Trump on Tuesday said he wasn’t interested in meeting with Iran’s President Hassan Rouhani in New York on the sidelines an annual United Nations General Assembly later this month after all. Over the weekend, Trump said he was “locked and loaded,” hinting at a possible retaliatory response against Iran. However, the U.S. president has been hesitant to directly hold Iran responsible for the Saudi attacks but has said that evidence from U.S. intelligence agencies, which have been shared with Riyadh, points to the Islamic Republic.

The Middle Eastern drama has temporarily overshadowed the Sino-American trade war, which had weighed on market sentiment and contributed to expectations that the Fed would reduce interest rates to tamp down the chance of an economic slowdown in the U.S.

Diane Jaffee, senior portfolio manager at TCW Group, told MarketWatch that the market has been edgy.

“Everybody’s center of gravity turned to geopolitics in the Middle East. I think everybody took a gulp because ‘locked and loaded’ is a pretty scary term and investors don’t have a lot of company specific information now”, Jaffee said.

US : Dow Jones Global
-17.53 -0.07%
Volume: 545.14M
May 29, 2020 5:14p
+14.58 +0.48%
Volume: 4.38B
May 29, 2020 5:14p
US : U.S.: Nasdaq
+120.88 +1.29%
Volume: 4.24M
May 29, 2020 5:16p
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