2016-09-30 12:59:32

US stock indices are declining for the second day amid the decline in the banking sector and in the stocks of biotechnology companies.

At the end of trading session on Thursday the Dow Jones Industrial Average fell by 1.1% to 18143 points, the S&P500 fell by 0.9%, the Nasdaq Composite fell by 0.9% under the pressure of the decline in the stocks of biotechnology companies.

On Thursday the US Commerce Department published GDP for Q2, which showed the rise in economic growth against the previous period. US GDP in Q2 with consideration of inflation, has grown by 1.4% on annual basis (against the rise of 1.1% a month ago and the forecast of +1.3%).

On Wednesday, Governor of the US Fed Janet Yellen said that although the time for the interest rate hike has not been specified, the increase in rate should take place. As soon as more clear dates of the rate hike will be known, stock indices will immediately drop.

According to CME Group, now, probability of interest rate hike in December is estimated at 56% against 53% on Wednesday. The USD index WSJ has grown by 0.3%.

Profit-taking in long positions on oil and the decline in oil prices also contributed to the decline in world and U.S. indexes. Oil prices have grown by over 7% over the last two trading days after the announcement by OPEC of the readiness to reduce production to 32.5-33 million barrels per day against 33.2 million barrels per day in August. At the next meeting of OPEC in Vienna on 30 November, OPEC countries will discuss the details of the agreement including individual quotas for each of the OPEC country.

The price of futures for oil is declining at the Asian session on Friday, as traders prefer to take profits. Investors do not believe that OPEC will be able to fulfill an agreement, which they have tentatively reached on Wednesday in Algiers. OPEC countries used break established quotas before.

Producers of shale oil in the United States also can increase their production in case of the possible reduction of oil production by OPEC.

Today at 20:00 (GMT+3) a report on the number of active drilling rigs in the USA from the oilfield services company Baker Hughes will be presented. Currently, the number of active rigs is 418. The increase in the drilling rigs will negatively affect oil prices and add pressure on the oil sector and stock indices.

It shall be also taking into consideration that today is the last trading day of the week and the month, and investors may wish to take profit.

DJIA: American indices are declining.  Fundamental analysis of 30/09/2016