STOCKS GO NOWHERE, OIL PLUNGES: Here’s What You Need To Know

Myles Udland

 Nov. 4, 2014

REUTERS/Amit Dave

We got a mixed read on the US manufacturing sector on Monday.

Stocks finished Monday little changed, with the S&P 500 hitting a new all-time intraday high before losing ground late in the day to close.
Crude oil was the big loser on Monday, with prices settling below $79 for the first time since the summer of 2012.
First, the scoreboard:

• Dow: 17,365, -25, (-0.15%)
• S&P 500: 2,018, -0.4, (-0.02%)
• Nasdaq: 4,639, +8, (+0.2%)

And now, the top stories on Monday:

1. Oil crashed. Again. Crude oil prices, which have been near $80 a barrel for the last few weeks or so took another leg lower late in the day on Monday, quickly dropping more than $2 to settle below $79 for the first time since June 2012. The drop in oil came late in the day, but about an hour after reports that Saudi Arabia cut its official price for deliveries. Crude oil, which is down more than 20% this year and is in a bear market, could also have an impact in the bond market. Business Insider’s Sam Ro noted that currently, about 15% of the high-yield, or “junk,” bond market is made up by energy companies. 

2. The pace of auto sales in October rose from the prior month. According to data from Wards Auto, the pace of auto sales climbed to 16.35 million in October, while AutoData statistics said sales came in at a pace of 16.5 million. September’s auto sales came in at an annualized pace of 16.34 million. In a note to clients Jesse Hurwitz of Barclays wrote that October sales were little changed from September, and while they came in “broadly in line” with expectations, sales were below the second quarter average of 16.8 million.

3. In the US, we also got three pieces of economic data. Manufacturing data from Markit Economics showed that manufacturing activity slowed to its slowest past since July, with Markit’s PMI reading coming in at 55.9 against expectations for a reading of 56.2. Meanwhile, the Institute for Supply Management’s manufacturing PMI came in at 59.0, better than the 56.1 that was expected by economists. 

4. Also on the economic data front, construction spending in September fell for a second straight month, dropping 0.4% to an annual rate of $950.9 billion. The report also showed that investment in both public and private projects declined in September. 

5. According to Bank of America Merrill Lynch’s latest Sell Side Indicator survey, Wall Street equity strategists are so bearish on stocks, it might be time to buy. In a note to clients Monday morning, Savita Subramanian and the equity strategy team at BAML wrote that that “we remain encouraged by Wall Street’s ongoing lack of optimism and the fact that strategists are still recommending that investors significantly underweight equities.” When the Sell Indicator has been this low or lower, BAML said, total stock returns have been positive over the next year 96% of the time. 

6. Bill Gross released his latest investment outlook, which talked about the need for not just central banking stimulus, but real fiscal stimulus from the government.