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Market sees slow gains as oil climbs out of bear territory

Radius Health sees significant gains, while Crocs Inc. falls on investor sentiment

After a good day for oil, a good night for Elon Musk's Tesla
After a good day for oil, a good night for Elon Musk's Tesla

Markets nudged higher by the close on Wednesday, as oil picked up to above $40 per barrel following a sharp decline in reported weekly gasoline inventories.

The S&P 500 index was up 0.31% by the end of the day, up to 2,163. The S&P Midcap 400 fared slightly better, up 0.61% to 1.546. Meanwhile, the S&P Smallcap 600 rose fairly steadily throughout the day, finishing ahead 0.55% at 736.

The climb built up steam as the session wore on although some stocks saw more turbulence than others. For instance, shares in Radius Health Inc (NASDAQ:RDUS) were 8.2% healthier at $53 as traders cited reheated and unconfirmed market speculation about possible bid interest in the osteoporosis specialist.

Radius is due to report earnings on Thursday, with analysts forecasting EPS of US$-0.98 per share, down 60.7% or $0.37 from last year's $0.61 per share.
 
Meanwhile, shares of Crocs Inc. (NASDAQ:CROX) fell sharply by 23% to $8.44 as skittish investors walked away from the company's dismal second-quarter report. Poor sales and a grim international outlook from the company's CEO left little room for optimism today, although by the end of trading the loss had leveled off.
 
After the bell, Tesla Motors (NASDAQ:TSLA) shares were briefly rose as high as $229.10, above the closing level of $225.79. Although Tesla fell short of Wall Street estimates for earnings and revenue, the company showed progress in increasing its production capabilities, which have long been an issue for the automaker.
 
The electric automaker reported a second-quarter adjusted loss of $1.06 per share on $1.56 billion in sales. Analysts, on average, expected Tesla to post a loss of 52 cents a share on revenue of $1.62 billion, according to Thomson Reuters.

Mid-Session Wrap

US stocks appeared to have a bit more stability by midsession on Wednesday, with a slow but steady upward trend after a brief dip at the opening.

Oil prices rose by about 3% after a much larger than expected decline in gasoline supplies measured by the US Energy Information Administration, albeit analysts were spooked by an unexpected surge in oil inventories when they expected a fall, especially in light of the American Petroleum Institute's numbers on Tuesday.

US crude inventories rose 1.4 million barrels last week, compared with analysts' expectations for a decrease of 1.4 million barrels, the Energy Information Administration reported.

Meanwhile, gasoline stocks drew down by 3.3 million barrels, compared with forecasts for a 200,000-barrel drop.

The S&P 500 index was still hovering around 2,159, up 0.1%, by midsession. The S&P Midcap 400 showed slightly more robust health, up 0.50% to 1545. The S&P Smallcap 600 also saw good gains overall, rising by 0.3% to 734, but there was a significant dip at mid-day.

With the West Texas Intermediate higher, the more positive sentiment was also reflected among midcaps, with Magellan Petroleum Corporation (NASDAQ:MPET) more than doubling by 124% to nearly $2.7. China Natural Resources (NASDAQ:CHNR) was up 55% to $2.5.


Open

US stocks dipped after the opening on Wednesday but by mid-morning were posting gains after digesting upbeat jobs data and cheering on rising oil prices after gasoline stocks dropped.

The S&P 500 index was up 0.1% to 2,159 – about 20 points below its recent intraday record highs, while the S&P Midcap 400 advanced 0.4% to 1,542 and the S&P Smallcap 600 added 0.2% to 734.

Although at first US stocks were nonplussed by the ADP employment report which showed the US private sector added slightly more jobs than expected last month. Meanwhile, a separate set of data indicated the large American services sector continued expanded – albeit at a modest pace in July.

The clutch of data came ahead of the closely-watched monthly employment report from the US Labor Department that is due on Friday.

The US services sector grew at a slightly slower pace in July than the month before, but businesses broadly expressed an upbeat attitude about the economy, suggesting the June Brexit vote didn’t immediately dampen the confidence of American firms.

US crude oil inventories unexpectedly jumped last week while gasoline stocks tumbled, a new report published on Wednesday showed.

Oil inventories rose 1.4m barrels last week, the Energy Department said, compared with Wall Street expectations of a 1.5m barrel draw.

US oil benchmark West Texas Intermediate was up 3.1% to $40.73.

However, that bearish news was contrasted by a 3.3m drop in gasoline inventories, which was more than 8-times the fall analysts had projected.

Footwear group Crocs Inc (NASDAQ:CROX) was off 24% to $8.36 after reporting weak results and a dimmer outlook.

Time Warner (NYSE:TWX) shares advanced 2.9% to $77.95 after reporting forecast-beating earnings.


Pre-Open

Wall Street futures are pointing lower ahead of the Wednesday’s opening bell as traders start to look to the US jobs market.

Dow Jones futures were down 30 points, while the S&P 500 and Nasdaq futures were also in negative territory.

Friday brings the US non-farm employment figures for July, but first traders get clues from payroll group ADP which revealed that private companies added 179,000 new jobs last month, ahead of expectations.

Last month ADP stats showed that 172,000 jobs were added in June.

US stocks are being weighed down somewhat by international markets - where London’s FTSE 100 is down 0.25% and earlier Asian benchmarks also lowered.

In commodity markets WTI crude prices edges slightly higher, after slumping below US$40 on Tuesday, and this morning was changing hands at US$39.80

On the corporate front insurer AIG is in focus after releasing better-than-expected results in yesterday’s after-market.

Footwear group Crocs was, meanwhile, set to plummet after weak results and a downgrade to its outlook.

There’s also interest in Time Warner and Hulu as the entertainment group, which owns HBO, reportedly took a 10% stake in the streaming group.

Time Warner’s results, meanwhile, also came in ahead of expectations.

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