Stocks tick higher as energy prices jump
U.S. stocks edged higher Wednesday as energy companies climbed with the price of oil. Banks also rose, and investors sold traditionally safe stocks. A survey showed that hiring by private companies continued at a solid but uninspiring clip in July.
Stocks opened lower but gradually recovered to finish at their highest levels of the day. The price of oil jumped after the U.S. government said gasoline stockpiles shrank last week.
The Dow Jones industrial average broke a seven-day losing streak and advanced 41.23 points, or 0.2%, to 18,355. The Standard & Poor’s 500 index rose 6.76 points, or 0.3%, to 2,163.79. The Nasdaq composite climbed 22 points, or 0.4%, to 5,159.74.
The employment survey by payroll processor ADP suggests employers continue to hire new workers and at a faster pace than they were this spring, when hiring slowed sharply. Still, growth has been sluggish this year. The Labor Department will release a report Friday that includes hiring by government as well as private companies. Experts think it will show a gain of about 175,000 jobs.
“So much of this [economic] recovery could be correctly categorized as slow but steady,” said Mike Baele, senior portfolio manager with U.S. Bank’s private client reserve. “It’s all better than last year, for the most part, but it’s also all below expectations.”
The price of crude oil jumped after the U.S. government said stockpiles of gasoline shrank by more than 3 million barrels last week. S&P Global Platts said that was far more than expected, and that total oil production also decreased slightly. That helped oil bounce back from the slump that’s taken it from $50 a barrel in early June down to about $40.
Benchmark U.S. crude rose 3.3% to $40.83 a barrel in New York. Brent crude, which is used to price international oils, rose 3.1% to $43.10 a barrel in London.
That translated into big gains for energy companies. Williams Cos. rose 7.1% to $25.67 and Devon Energy jumped 5.2% to $38.
Financial stocks also traded higher. Insurance company AIG jumped 7.3% to $58.10 after a strong second-quarter report. Intercontinental Exchange, the owner of the New York Stock Exchange and other stock markets, rose 5.3% to $278.02 after it said it will split its stock 5-for-1 and buy back $1 billion in shares.
Earnings reports continued to stream in. Luxury clothing, handbag and accessories company Kate Spade skidded 18.2% to $16.47 after it disclosed weak results and lowered its estimates for the year. Kate Spade said travelers aren’t spending as much money at stores that depend on shopping by tourists.
Footwear maker Crocs plunged 23.3% to $8.44 after its second-quarter sales fell $25 million short of analyst estimates. Crocs projected a bigger shortfall in the quarter and said it expects overall revenue to shrink this year.
Fitness tracker maker Fitbit jumped 13.4% to $14.93 after its quarterly results came in stronger than expected. The stock is still down 50% this year, though, and a year ago it was trading around $50 a share.
Etsy climbed 8.9% to $13.84. The online crafts marketplace said sales were better than expected, and it raised its sales and other projections for the year.
Zagg, a mobile device accessory company that bought smartphone charger company Mophie this year, jumped 10.5% to $7.03 after it reported an unexpected profit and sales that were stronger than estimates. It also said it expects a strong second half, in part because the “Pokemon Go” craze boosted its sales as players needed to recharge their phones more often.
The price of gold fell $8.30 to $1,356.10 an ounce. Silver fell 23 cents, or 1.1%, to $20.47 an ounce. Copper fell 1 cent to $2.20 a pound.
Wholesale gasoline rose 4 cents to $1.35 a gallon. Heating oil rose 3 cents to $1.29 a gallon. Natural gas rose 11 cents to $2.84 per 1,000 cubic feet.
France’s CAC 40 and the FTSE 100 in Britain each slipped 0.2%, and Germany’s DAX rose 0.3%. Japan’s benchmark Nikkei 225 slid 1.9%, South Korea’s Kospi lost 1.2% and Hong Kong’s Hang Seng fell 1.8%. Japanese stocks have been slipping because the country’s recently announced stimulus package, worth around $272 billion, fell short of expectations. Much of the money is already in the pipeline. A strong yen is also deepening pessimism over prospects for Japan’s recovery.
Bond prices inched higher and the yield on the 10-year Treasury note fell to 1.55% from 1.56%. The dollar rose to 101.13 yen from 100.88 yen. The euro fell to $1.1145 from $1.1227.
UPDATES:
2:30 p.m.: This article has been updated with additional information.
1:25 p.m.: This article has been updated with closing prices and additional information.
This article was originally published at 7:50 a.m.
