THERE are now just seven full trading days left in the year and some investors are still hoping for an end of year surge to close out what has been a sluggish 2015.
The S&P 500 index is down three per cent so far this month, and the recent and persistent slide in oil prices are raising some doubts the traditional Santa rally will be able to close out the year on a positive note. The price of crude has closely correlated with the S&P 500 over the past 20 sessions as the commodity has slid toward multi-year lows.
“For whatever reason, this has been the theme pretty much ever since oil got under $50: that lower oil prices are bad for the market,” said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.
As US crude prices have dropped about 20 per cent since late November, deepening their 18 month free fall, the S&P 500 has pulled back more than three per cent. The energy sector, the worst-performing S&P group, slumped more than 12 per cent over that time. Goldman Sachs said on Thursday it sees a high risk of oil prices declining further.
“The oil story is not going away," said Quincy Krosby, market strategist at Prudential Financial. “As (US crude) continued to push downward, it is affecting the market.”
Away from oil, big macro numbers coming out of the US include final third-quarter US gross domestic product, the latest data on the US housing market, as well as consumer spending and income for November.
The company reports are a little thin on the ground, though Nike is set to unveil its second quarter earnings on tomorrow. Chip maker Micron will be sharing the limelight on tomorrow with it’s quarterly results.