Stocks on Wall Street finished on Friday near lows for the session, but nonetheless closed October as the best month in four years.
Having started the month at 16,278.62, the Dow Jones Industrial Average closed at 17,663.54 on Friday, showing a gain for the month of 8.5%. The S&P 500 was at 1,919.65 on October 1st and closed at 2,079.36 Friday, up 8.3%, while the Nasdaq Composite climbed from 4,624.46 to finish at 5,053.75 an increase of 9.4%. Both the S&P 500 and the Nasdaq Composite are now in positive territory for the year, while the Dow is only down by about 0.9%.
The market was helped on Friday by oil prices which closed higher after oil services company Baker Hughes announced that there had been a further cut of 16 in the number of rigs in production to 578. West Texas Intermediate closed up 58 cents at $46.59 a barrel, while Brent crude was up by $1.05 at $49.85. The rig count is now at its lowest for over five years.
In addition, a survey by Reuters showed that both Iraq and Saudi Arabia pumped less oil in October than the African members of OPEC, which pushed the total produced by the 12 countries down from close to record highs.
Chevron To Slash 2016 Budget
Chevron announced that it will cut its budget for 2016 after posting better than expected results of net income of $2.04 billion, a sharp drop from the $5.59 billion for the same quarter in 2014. The company is to lay off some 6,000 to 7,000 workers – around 10% of the workforce – and is also planning to slash its budgets for 2017 and 2018 in addition – a warning sign that it is not expecting oil prices to increase at any time in the immediate future.
One analyst noted that investors seem to have come to the conclusion that the Federal Reserve is not likely to raise interest rates for the time being, with inflation as low as it is, so that money will still be cheap, and therefore the way to go is into stocks.
Another commentator said that the volatility in August and September was largely driven by fears over China and the belief that the Fed would hike the interest rate, but both these worries have lessened.