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Energy Stocks Lead Market Up Despite Crude Oil Decline

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Today's financial recap and tomorrow's financial outlook.

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US equities shook off Monday's weakness to make a move to the upside.

October Construction Spending rose 1.1% month-over-month, easily exceeding the +0.6% consensus. September's number was also revised upward.

November Auto sales came in stronger-than-expected with General Motors (GM), Chrysler, and Honda (HMC) all reporting solid gains. Research firm AutoData said the total US industry sales rate was 17.2 million in November, marking the best November since 2003. According to Reuters, analysts were expecting a 16.7 million unit sales pace.

The solid auto sales news functioned as something of an offset to yesterday's reports of weak Black Friday retail sales.

Elsewhere in consumer news, Walmart (WMT) announced it broke its online sales record for Cyber Monday, though it did not disclose details. And market research firm said that from Thanksgiving through yesterday, online sales were up 20.6% year-over-year.

Crude oil prices rose momentarily intraday after Saudi Arabia said it would consider cutting oil production output if other nations joined. Crude actually finished negative on the day, but energy stocks extended their bounce off Monday's extreme low, and finished the day as the second-best performing S&P sector behind healthcare.

The Energy Select Sector SPDR ETF (XLE) rose 1.1% vs. a 0.6% gain for the S&P 500 (SPX).

Biotech stocks were also strong today, led by Biogen Idec (BIIB), which rose 6.4% on news that its Alzheimer's treatment was moving straight from Phase I to Phase III testing. The iShares NASDAQ Biotechnology Index ETF (IBB) rose 2.1%.

Overseas, China's Shanghai Composite Index rose 3.1% to hit multi-year highs as traders aggressively bid up Chinese banks on anticipation of looser monetary policy. Additionally,  trading volumes in China are expected to increase courtesy of its Stock Connect program, which loosened restrictions on foreigners' access to Chinese A shares. Such activity would directly benefit China's banks.

Russia, which has been battered by the sharp decline in oil prices since June, remains a source of worry at the fringes for some traders.

During today's session, the Russian ruble fell 5% against a basket comprised of the US dollar and Euro. It is now down more than 16% over the last five days.

Just two weeks ago, the government insisted it would no longer intervene to support the ruble, but it apparently reached a pain threshold because it broke that promise yesterday. That, along with news that Russian banks were limiting cash withdrawals, hurt confidence in the country's financial system and economy.

Tomorrow's Financial Outlook

Wednesday will be a busy day data-wise, with the major releases being Canada's rate decision and the November ISM Non-Manufacturing Composite, both of which will be released at 10:00 a.m. EDT. Other numbers on tap include US MBA Mortgage Applications, Non-Farm Productivity and Unit Labor Costs, Services PMI, and crude oil inventories.

The action has been unpredictable as of late, particularly in commodities, though the S&P 500 remains remarkably stubborn.

Stabilization in oil would help the bulls case, as that would provide support for the shaky high-yield bond market and reduce worries over deflation.

For now, the bears are still having trouble breaking the 13%+ rally off the October lows, and thus the bulls are in control for now.

Twitter: @Minyanville

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No positions in stocks mentioned.

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