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Dec 16, 2016

European Markets Closingi Report on December 16, 2016: Stocks Erase Gains After Report of China Seizing Underwater UIS drone

cnbc.com

Evelyn Cheng
 
U.S. stocks came off session highs after a Reuters report that a Chinese Navy warship has seized an underwater drone deployed by an American oceanographic vessel in international waters in the South China Sea.

"A little world tension. The markets sold off exactly when that news story came out," said Peter Coleman, head trader at Convergex.
The S&P 500 and Nasdaq composite gave up slight gains to trade a touch lower in late morning trade. Technology was the greatest decliner in the S&P. The Dow also briefly turned negative.
Real estate briefly rose 1 percent to lead S&P 500 advancers, while UnitedHealth contributed the most to gains in the Dow Jones industrial average.
"You have (options) expiration today and that's obviously going to make things a little messy," said Jeremy Klein, chief market strategist at FBN Securities. He's also watching the dollar for any signs of further strengthening.

"That's becoming the real issue because you've got a very high multiple out there and a lot of expectations for tax cuts and stimulus, but if the dollar was a problem a year ago, it's got to be a problem" going forward, he said.
The U.S. dollar index hit 103.56 Thursday, its highest level since Dec. 24, 2002. The greenback was near 103.12 in morning trade Friday, with the euro around $1.042 and the yen near 118.19 yen versus the dollar.
A strong dollar and low oil prices have weighed on U.S. corporate earnings in the last year.
U.S. crude oil futures were about 1 percent higher above $51 a barrel.
Treasury yields were off recent highs, with the 10-year Treasury yield around 2.58 percent and the 2-year Treasury yield near 1.25 percent.
Coleman said he's "watching the 10-year Treasury yield. It's obviously running at a moderate level but if and when we get to 3 percent, what kind of impact does that have on the market?" he said.
The dollar and yields jumped after the Federal Reserve on Wednesday surprised with its forecast for three rate hikes in 2017.
Richmond Fed President Jeffrey Lacker is set to speak at midday.
Housing starts fell a more-than-expected 18.7 percent in November to a seasonally adjusted annual rate of 1.09 million units. Building permits declined 4.7 percent.
In the open, the Dow Jones industrial average climbed 50 points, or 0.25 percent, to 19,901, with 3M and UnitedHealth contributing the most to gains and Goldman Sachs the greatest negative impact on the index.
The S&P 500 added 5 points, or 0.20 percent, to 2,266, with real estate leading all sectors except financials higher.
The Nasdaq composite climbed 13 points, or 0.23 percent, to 5,469.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded a touch lower below 13.
About two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 364 million and a composite volume of 423 million at the open.