US Stock Market Overview – Shares Settle Mixed, Energy Shares Surge

Energy shares surge on high crude oil prices
David Becker
Crude Oil daily chart, April 22, 2019

US stocks were mixed on Monday, with the Nasdaq and S&P 500 notching up gains and the Dow Industrials bucking the trend. Energy shares were on a tear as oil prices surged, in the wake of the Trump Administration terminating wavers for Iranian oil purchases. Existing home sales in the US came in much weaker than expected, as homes on the top end and bottom end showed lackluster turnover.

Nearly all sectors were lower, except for energy shares which rallied 2.4%. Cyclicals were the worst performing sector declining 1.3%. Despite recent sideways price action the nearly all sectors are higher over the past 2-months.

Energy Shares Surge as Oil prices Rally

Energy shares surged on Monday, as crude oil prices rallied 2.6% and closed at 2019 highs. Oil prices were buoyed after the White House announced that all oil buyers will have to end imports from Iran in just over a week or be subject to U.S. sanctions. The Trump Administration had given buyers a 180-day waver to purchase Iranian oil, but now want to push Iranian exports to zero. Both Brent and WTI prices rallied on the news and should continue to climb higher. Saudi Arabia increased production substantially thinking that Iran would see lower volumes at the end of 2018, but when the Trump administration provided a waver, prices tumbled. It will be difficult now for the White House to get the Saudis to increase output now.

The White House and Saudi Arabia Want Different Outcomes

The issue is that the White House wants prices to move lower while Saudi Arabia wants that to remain stable at higher prices.  The new deadline for renewing the waivers was set to fall on May 2. China, India and Turkey were among Iran’s top customers and had been expecting to receive a renewed waiver to continue to buy Iran’s oil.

US Sales of Homes Were Weaker than Expected in March

United States existing homes sales came in much were weaker than expected in March. What was surprising was that upper end and lower end homes suffered due to completely different factors. The low end is seeing lower sales due to the lack of inventory. It appears that investors have purchased these homes and are not turning them over but instead are renting these properties. The high end is seeing the lack of demand. Sales on the lower end of the spectrum were down 13% in March year over year according to the National Association of Realtors. The inventory of cheaper homes continues to drop. Sales of home that are valued at more than 1-million dollars were down 11% year over year, even though there are plenty of those homes for sale.

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