In this Jan. 14, 2014 file photo, oil pumps work in the Persian Gulf desert oil field of Sakhir, Bahrain. In the second half of 2014, oil prices dropped by half.Hasan Jamali/The Associated Press
Oil fell from the highest close in more than a week on concern U.S. growth won't boost demand enough to sop up a glut.
American equities rose, with the Russell 2000 Index of small companies topping a closing record, while the dollar weakened from a more than five-year high.
The Standard & Poor's 500 Index rose 0.2 per cent at 10:45 a.m. in New York, for a sixth straight gain in the longest streak since June. The Russell 2000 added 0.5 per cent to cap a 15 per cent rally from an October low to top its March record on a closing basis. The Stoxx Europe 600 Index closed lower by 0.1 per cent in a holiday-shortened session.
West Texas Intermediate fell 3.3 per cent, erasing yesterday's 3 per cent gain, as the Bloomberg Dollar Spot index declined for the first time in six days, dropping 0.2 per cent. The yield on 10-year Treasury notes rose three basis points to 2.29 per cent. The ruble weakened after a three-day advance. Copper dropped 0.3 per cent.
Oil is heading for the biggest annual decline since 2008 amid a global glut exacerbated by the highest U.S. output in more than three decades and a decision by OPEC to resist supply cuts. A government report showed inventories unexpectedly rose last week. U.S. equity indexes rose for a fifth day yesterday, with the Dow Jones Industrial Average surging past 18,000, after a report showed the economy grew an annualized 5 per cent. Stocks took off last week after the Federal Reserve pledged patience over interest-rate increases.
"We're still in the same game of global easing, very low interest rates and disinflation in parts," said Veronika Pechlaner, who helps oversee $2.3-billion at Ashburton Ltd. in Jersey, the Channel Islands. "Valuations have gone from very attractive to more average levels, but they're not that extended. I wouldn't be too negative on equities."
U.S. equity markets will close at 1 p.m. for Christmas Eve, while financial markets in the U.S., Europe and most of Asia will be closed tomorrow for Christmas Day. Japan and mainland China will be open.
Growth Rate
The U.S. annualized growth rate was revised up from a previous estimate of 3.9 per cent, and was the biggest advance since the third quarter of 2003. Separate data showed consumer spending rose more than previously estimated in the quarter, while orders for U.S. durable goods and purchases of new homes unexpectedly declined last month.
Today's data indicated jobless claims dropped by 9,000 to 280,000 in the week ended Dec. 20, the fewest since early November, from 289,000 in the prior period.
The Dow and S&P 500 closed at all-time highs yesterday after the biggest five-day rally since 2011. The S&P 500 is up 0.8 per cent in December, and has climbed 13 per cent for the year.
Traders have added the most money on record to a popular exchange-traded fund tracking the S&P 500 since the Federal Reserve released its policy decision last week. The SPDR S&P 500 ETF Trust has absorbed more than $25-billion from Dec. 17 to Dec. 23, the biggest five-day inflows in data going back to 2000.
Pretty Remarkable
"It's pretty remarkable to see what the market's done the last few days," Tobias Levkovich, Citigroup Inc.'s chief U.S. equity strategist in New York, said in an interview on Bloomberg Radio's "Surveillance" with Tom Keene and Pimm Fox. "Some of it is the illiquidity environment of this time of year, and some of it relates to the path of last resistance being up at this point."
WTI crude fell to $55.28 a barrel, after rising 3.4 per cent yesterday. Brent oil lost 3.4 per cent to $59.61 a barrel in London.
Stockpiles climbed 7.27 million barrels to 387.2 million in the week ended Dec. 19, the Energy Information Administration said. The report was projected to show a 2.5 million-barrel decline, according to the median estimate in a Bloomberg survey of nine analysts.
Dollar, Yen
The greenback fell from the strongest level in two years versus the euro. It has advanced at least 4 per cent against all its 16 major counterparts this year.
The yen strengthened 0.2 per cent to 120.42 per dollar after declining 3.5 per cent in the previous five days. The dollar fell 0.4 per cent to $1.2217 per euro after appreciating to $1.2165 yesterday, the strongest level since August 2012. The euro was little changed at 146.87 yen.
The yield on U.S. 10-year Treasuries rose two basis points to 2.28 per cent. It jumped 10 basis points yesterday, the most on a closing basis since November 2013. The rate on similar– maturity U.K. gilts rose for a second day, adding three basis points to 1.83 per cent.
The Treasury market will close Dec. 25 in observance of the Christmas holiday, according to the Securities Industry and Financial Markets Association's website. The group recommended an early close at 2 p.m. New York time today. Euro-area government bond markets were shut today and re-open Dec. 29.
Europe Rally
Europe's Stoxx 600 gauge rallied 6.4 per cent in the previous six days, its biggest jump since December 2011. It has recovered about two-thirds of the losses posted earlier this month and closed 2 per cent below its almost seven-year high reached Dec. 5.
Smith & Nephew Plc jumped as much as 8.5 per cent as people familiar with the matter said Stryker Corp. is planning a takeover offer for the U.K. medical-device maker, a bid that could come within weeks.
Developing-country stocks were little changed, with the MSCI Emerging Markets Index lower by 5.4 per cent this quarter.
Russia's Micex Index gained O.8 per cent after Standard and Poor's said it's considering cutting the nation's credit rating to junk for the first time in a decade. The equities gauge is down 6.4 per cent in 2014.
The Shanghai Composite Index fell 2 per cent after plunging 3 per cent yesterday, as some brokerages in China raised the threshold for margin trading and short selling to control risks, the 21st Century Business Herald reported. Citic Securities Co. and Haitong Securities Co. both slumped 9 per cent as data showed new stock-trading accounts dropped 29 per cent last week.
Dubai's benchmark DFM General Index climbed 2.5 per cent, trimming the loss this quarter to 24 per cent, while equities in Saudi Arabia gained 1.7 per cent.
Copper declined for a third day and was at $6,311 a metric ton on the London Metal Exchange.
Wheat for March rose for a second day, advancing as much as 0.7 per cent to $6.3975 a bushel on the Chicago Board of Trade. Russia, the world's fourth-biggest exporter, said Dec. 22 it plans to introduce grain export duties.