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US stocks surge on Greek debt deal hopes, energy tumbles

The US stocks posted a modest increase on Tuesday on Coca-Cola earnings and hopes over a probable deal in Greek debt negotiations, but a decline in the energy shares contributed to limit the advance.

The S&P 500 surged 0.36 percent or 7.45 points to 2,054.19, while the Dow Jones industrial average surged 0.26 percent or 45.85 points to 17,775.06. On the other hand, the Nasdaq Composite gained 0.52 percent or 24.66 points to 4,750.67.

The shares of Coca-Cola Co jumped 3.2 percent to USD 42.53 to contribute in lifting both S&P 500 and Dow. The company reported a better-than-expected sales as well as profit in its biggest market, North America, which rose for the first time in the four quarters to balance the impact of a strong dollar on its overseas business.

The first drop in the prices of oil in the continuous four sessions reflected on the energy stocks as the S&P energy index fell 1.3 percent, turning as the worst performer of the 10 major S&P sectors.

The US crude CLc1 fell 3.4 percent to USD 51.04, while Brent LCOc1 tumbled 1.8 percent to USD 57.30 after the International Energy Agency (IAE) cautioned against more selloffs in the near term amid the continuous rise in stockpiles.

Aeropostale increased 14 percent to USD 3.01 as the apparel retailer chain witnessed better-than-expected sales during the holiday season and encouraged its outlook during the fourth-quarter.

The US wholesale inventories hardly surged in December, the latest indication that the growth in fourth-quarter could be revised at lower level.

The declining issues outnumbered the advancing ones at the New York Stock Exchange by 1,718 to 1,193, for a 1.44: 1 ratio. On the other hand, 1,311 issues dropped and 1,261 advanced on the Nasdaq, for a 1.04:1 ratio.

The S&P 500 recorded 18 new 52-week highs and just two new lows, while the Nasdaq Composite posted 28 new highs and 26 new lows.

US consumer spending weakest at 0.3 percent since 2009 in December

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The consumer spending in the United States witnessed its biggest fall since late 2009 in December as the households managed to save the extra cash due to the declining prices of gasoline.

According to the Commerce Department report, the consumer spending dropped 0.3 percent after gaining 0.3 percent in October and 0.5 percent in November last year.

The consumer spending accounts for over two-thirds of economic activity of the United States.

Ryan Sweet, Moody’s Analytics’ senior economist, said, “The consumer is poised to do well in early 2015. Lower gasoline prices are going to provide a big lift to consumption.”

The drop in the consumer spending, which is the largest since September 2009, indicated a falling trend in spending at service stations amid tumbling gasoline prices, softness in demand for utilities over weather issues and weak auto receipts.

Another data, released on Monday, showed that the country’s factory activity cooled in the month of January, indicating that the economy may have welcomed the new year on a slightly softer note against the expectations.

Meanwhile, the analysts said that the upbeat and cash-flush consumers are likely to bring spending on track and buoy the economy in 2015.

The spending data was incorporated in the fourth-quarter gross domestic product report released on Friday. The consumer data showed the economy growing at an annual pace of 2.6 percent, with the consumer spending increasing at a brisk rate of 4.3 percent, which is the fastest since 2006.

According to the economists, the fourth-quarter GDP growth is expected to be revised at the rate of at least 2.8 percent after another report by the Commerce Department on Tuesday suggested stronger non-residential construction spending in the month of December than earlier expected.

The economists have estimated the consumer spending for the first quarter ranging between four and five percent rate.

US stocks fall as energy shares decline on lowering oil prices

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The US stocks dropped for a second consecutive session on Monday, led by another major decrease in the energy shares, as the prices of global oil fell nearly five percent amid growing concern ahead of corporate earnings season.

The prices of oil extended their recent free-fall following the cut in Goldman Sachs’ short-term price forecasts, while the Gulf producers showed no indications of curbing output.

The S&P energy index fell 2.8 percent, the largest drag on the S&P 500. Brent declined 5.3 percent to settle at USD 47.43 and US crude CLc1 tumbled 4.7 percent to USD 46.07.

Tim Ghriskey, chief investment officer of New York-based Solaris Group, said, “Crude oil is heading down again here. That’s sent us into negative territory again. There’s a lot of confusion and concern about the impact of oil prices.”

The profit forecasts for energy companies featuring at S&P 500 have sharply declined in the recent months, with fourth-quarter earnings for the energy sector now expected to have dropped 21.1 percent from a year ago, a news agency data showed. Meanwhile, the earnings for all of the S&P 500 are likely to have surged only 3.8 percent over the year-ago period.

“What everybody is concerned about is what managements are going to say about crude oil and about global economies,” Ghriskey said.

The Dow Jones industrial average dropped 96.53 points or 0.54 percent to 17,640.84. While the S&P 500 reported loss of 16.55 points or 0.81 percent to 2,028.26, the Nasdaq Composite declined 39.36 points or 0.84 percent to 4,664.71.

Decline in oil prices a good indicator for US economy: Fed chief Yellen

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Even if the dramatic drop in the oil prices might have spooked some investors, but Federal Reserve chief Janet Yellen says she isn’t worried of the plunge.

According to Yellen, the tumbling of oil prices below USD 55 a barrel is a good news for American consumers as it would be just like a tax cut for them.

While addressing a press conference on Wednesday, Yellen said, “From the standpoint of the U.S. and U.S. outlook, the decline we’ve seen in oil prices is likely to be, on net, a positive.”

“It’s good for families, for households. It’s putting more money in their pockets,” she told media persons.

The lowering of oil prices and the cheaper energy is resulting into the lowering of expenses for many US businesses such as transportation industry like airlines.

Due to the fall in oil prices, the drivers in at least 13 states countrywide are able to buy gas for cheaper than USD 2 a gallon.

According to Yellen, the fall in oil prices may lead to cutbacks in the drilling sector that in return is expected to slow down the capital spending for wells that are not a profitable affair in the current environment.

The Fed chief has, however, underlined that even if the shale boom, the country is still a net oil importer. This connotes cheaper oil prices are a good sign for the overall economy.

“On balance, I would see these developments as a positive,” she asserted.

On Wednesday, the Federal Reserve has offered an upbeat assessment of the recovering economy and the labor market, signaling a hike in interest rates early next year.

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