Stocks edge higher as oil prices rise; dollar weakens
U.S. stocks again ticked higher Thursday as the continuing rebound in oil prices gave energy companies a lift. The gains were modest, however, as investors have been avoiding big moves. The dollar weakened further, and against the yen it’s at its lowest in almost three years.
Stocks wobbled in the early part of the day, but energy companies were a standout as the price of U.S. oil reached its highest level since the beginning of July. The weakening dollar helped exporters, including technology and chemical companies. The market turned higher in the afternoon. Phone companies continued to slump, as did financial firms. Stocks haven’t moved much this week and haven’t made many big moves over the last month.
Ryan Detrick, senior market strategist for LPL Financial, said the U.S. market tends to be calm in August and the trading volume low. Lower volume means that surprising events can cause big swings for stocks, but so far, it has made this month the opposite of January and early February, when stocks tumbled and the markets were rattled.
“We had record volatility to start the year, and these things do tend to revert,” he said. “It’s amazing how quickly things change.”
The Dow Jones industrial average edged up 23.76 points, or 0.1%, to 18,597.70. The Standard & Poor’s 500 advanced 4.80 points, or 0.2%, to 2,187.02. The Nasdaq composite rose 11.49 points, or 0.2%, to 5,240.15.
Benchmark U.S. crude rose $1.43, or 3.1%, to $48.22 a barrel in New York. Brent crude, used to price international oils, rose $1.04, or 2.1%, to $50.89 a barrel in London. That gave energy companies a lift. Marathon Oil jumped 6.2% to $16.68 and Devon Energy rose 3.3% to $44.76.
Oil prices have rallied over the last two weeks, but they have essentially remained between $40 and $50 a barrel for the last four months. Oil traded as low as $26.21 a barrel in February, so the recent relative stability has boosted energy company stocks.
The dollar fell to 99.98 yen, its lowest level since October 2013. The euro rose to $1.1354 from $1.1290. The dollar was worth about 120 yen at the start of the year and has been gradually weakening. A weaker dollar is good for U.S. exporters such as chemical, mining and technology companies.
On Wednesday the Federal Reserve released minutes from its latest meeting, which investors took as new confirmation that the Fed is in no hurry to raise interest rates again.
Detrick cautioned that the yen sometimes gains strength when investors are nervous
Wal-Mart Stores climbed 1.9% to $74.30. The world’s largest retailer raised its annual estimates after reporting strong results for the second quarter. The company is revamping stores and has won back some customers. Wal-Mart, which has lost sales to websites such as Amazon, is also buying online retailer Jet.com for $3 billion as it fights for more online shoppers.
Internet gear maker Cisco Systems slipped 0.8% to $30.48. On Wednesday the San Jose company reported unimpressive quarterly results and said it would lay off 5,500 employees, or about 7% of its staff. It already had cut about 10,000 jobs over the last few years and it joins companies like Microsoft, Intel and HP in eliminating jobs and overhauling its product lines.
Prison operating companies nosedived after the Justice Department said it would end or sharply reduce contracts with the companies, saying privately run prisons have more safety and security problems than prisons run by the government.
Corrections Corp. stock plunged 35.5% to $17.57 and Geo Group dived 39.6% to $19.51, their lowest levels in years. The two companies each get about half their revenue from contracts with the federal government. However, the new policy does not cover private detention facilities used by Immigration and Customs Enforcement, and both companies operate those facilities.
Harley-Davidson stock skidded after the U.S. government said the motorcycle company made racing tuners that caused some bikes to emit higher-than-allowed amounts of some types of air pollutants. The shares dropped as much as 8%, although they recovered somewhat after the Justice Department said Harley-Davidson agreed to settle the case by buying back and destroying the devices and paying $15 million. The stock closed down 1.7% at $53.54.
After the markets closed, Gap reported a 43% drop in net income for the second quarter, weighed down by moves to close stores, and offered a muted annual profit outlook. The San Francisco clothier’s stock slipped a bit in after-hours trading.
Bond prices inched higher and the yield on the 10-year Treasury note fell to 1.54% from 1.55%.
Gold rose $8.40 to $1,357.20 an ounce. Silver rose 9 cents to $19.74 an ounce and copper rose 2 cents to $2.17 a pound.
Wholesale gasoline rose 4 cents to $1.49 a gallon. Heating oil edged up 4 cents to $1.53 a gallon. Natural gas rose 6 cents to $2.67 per 1,000 cubic feet.
Germany’s DAX rose 0.6% and the French CAC 40 index rose 0.4%. Britain’s FTSE 100 rose 0.1%. Hong Kong’s Hang Seng rose 1% and Tokyo’s Nikkei 225 slid 1.5%. The Kospi in South Korea rose 0.9%.
UPDATES:
2:40 p.m.: This article was updated with closing prices and additional details.
This article was originally published at 9:20 a.m.
