Futures traded lower after oil added more than $2 p/bl on news that Iran’s elite Revolutionary Guards test-fired nine long-and medium-range missiles Wednesday, with one missile capable of reaching Israel and U.S. bases in the region. However, futures gradually improved allowing for a flat opening this Wednesday session.
At 10:30ET, the Department of Energy released its weekly inventory statistics. U.S. oil supplies showed a larger-than-expected drop in inventory levels, falling by 5.9 million barrels last week, and posting a decline of 2 percent. This news prompted oil to spike upwards of $1, to only later retrieve and hit new session lows of $135.34. Having dropped by more than $9 in the last two sessions, oil finished up $0.01 to $136.05 p/bl on the New York Mercantile Exchange.
The major averages remained with slight losses near the unchanged mark at midsession as the market mostly revolved around oil price fluctuations. After that, as market weakness broadened its base and selling pressure intensified, the indices increased their losses with the Dow posting more than 230 points negative.
In other news
– Alcoa (AA), the world’s No. 3 aluminum producer launched the second quarter earnings season. The company reported a 24% drop in quarterly profit, to $546 million, due to rising energy and raw material costs. However, the results topped Wall Street’s expectations.
– According to UBS, Cisco (CSCO) faces challenges due to slowing U.S. and Europe sales, thus lowering their price target on the company from $27 to $25.50, maintaining their Neutral rating. However, UBS upgraded Nucor (NUE) and Steel Dynamics (STLD) to Buy from Neutral, stating that North American steel stocks are oversold.
– Merrill Lynch & Co. (MER) shares dropped, after Fitch Ratings said it may downgrade its long-term issuer credit default rating.