Traders-Blog.com

The U.S stock market did not perform well today, due to a high increase in the price of oil. The Dow finished session down 21.10 points, to close at 10,536.93. Besides, the Nasdaq fell 13.52 points, to close at 2,164.39. Meanwhile, the S&P closed at 1,223.13, after falling 3.29 points.

Crude futures closed at $63.94 a barrel, after an intraday high of $63.99. Besides, retail gasoline prices surged to records. The rise in the price of oil was triggered as a threat to the U.S. embassy in Saudi Arabia increased concerns that supplies from the country could be reduced. The American Embassy in Riyadh and consulates in Jeddah and Dhahran will be closed tomorrow due to a threat against U.S government buildings.

Investors are concerned that in tomorrow’s meeting, the Federal Reserve will increase the size of its rate hikes. But, economic indicators have been generally positive since last FOMC meeting at the end of June. For instance, second-quarter GDP growth was 3.4 percent, which shows a healthy outlook for the economy. Besides, the unemployment rate fell to 5 percent in July.

Utilities shares, such as Exelon Corp., fell as expected higher interest rates are more appealing now than dividend-paying stocks. Exelon, a producer of nuclear power, dropped $1.14 to close at $51.14. Also, Duke Energy Corp. which is the largest U.S utility owner by sales, closed at $28.44, after falling 64 cents.

Investors’ concerns about high interest rates also hurt homebuilders, such as D.R. Horton Inc. and real estate investment trusts (REIT) such as Simon Property Group Inc. Thus, D.R. Horton which is the biggest U.S. home builder by stock market value fell $1.69 to close at $36.76. Finally , Pulte Homes Inc. lost $3.20, to close at $86.75.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter