Stocks jump, led by energy firms; S&P 500 reaches highest level in a year
Energy companies led a broad rally in U.S. stocks Monday as investors shrugged off another slide in crude oil prices.
The gain nudged the Dow Jones industrial average slightly above the 18,000-point mark for the first time since last summer, and the Standard & Poor’s 500 index rose to the highest level in a year.
The market had been headed lower early in the day, following news that representatives from several major oil-producing nations meeting over the weekend in Doha, Qatar, failed to hammer out a deal to cut output. That sent the price of U.S. oil down 7% at one point; oil ended down 1.4%.
Beyond the volatile oil market, investors had their eye on the latest company earnings, which have been mostly encouraging so far, said Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute.
“We’re seeing broad-based gains across all the sectors,” Lynch said. “The market is maybe finding some resilience here and maybe looking back on the fundamentals of the earnings season and seeing it’s not so bad.”
The Dow climbed 106.70 points, or 0.6%, to close at 18,004.16. The last time the average was above 18,000 points was July 20.
The S&P 500 index jumped 13.61 points, or 0.7%, to 2,094.34. That’s the highest level since April 14 last year.
The Nasdaq composite index advanced 21.80 points, or 0.4%, to 4,960.02.
For the year, the Dow is up 3.3% and the S&P 500 is up 2.5%. The Nasdaq is down about 1%.
The price of oil had risen in recent weeks on hopes for a deal that would limit oil production in an effort to relieve a global glut. But hopes for a meaningful production cut faded Monday when the talks over the weekend failed to deliver a deal.
Saudi Arabia said it wouldn’t back a deal without the involvement of Iran, which is trying to ramp up output as international sanctions are lifted. Already tense relations between the two countries deteriorated in recent months over issues including the wars in Syria and Yemen, in which they are backing opposing sides.
Word of the failed talks initially pulled oil prices lower, weighing on stocks.
All told, U.S. crude fell 58 cents, or 1.4%, to close at $39.78 a barrel in New York. Brent crude, the international benchmark, declined 19 cents, or 0.4%, to close at $42.91 a barrel in London.
Investors decided that expectations for an oil output deal had been very modest to begin with, said Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management.
“The Saudis, back in January, had continued to point to June as being the OPEC meeting that they were really focused on,” Wiegand said. “Perhaps the expectations for something before June were misplaced.”
Several energy and drilling services companies rebounded after an early morning sell-off.
Hess rose 4.7% to $59.84 and Marathon Oil climbed 2.7% to $13.36. Baker Hughes rose 4.3% to $45.70.
Energy companies notched the biggest gain among the sectors in the S&P 500, rising 1.6%. The sector is up 7.7% this year so far.
Stocks in the healthcare and consumer discretionary sectors also posted big gains.
Hasbro jumped 5.8% to $87.18 after reporting better results than analysts were expecting. The toy company benefited from strong sales of “Star Wars,” “Frozen” and Disney princess products.
Endo International led a surge among several pharmaceutical companies. The stock also posted the biggest gain in the S&P 500, vaulting 8.2% to $28.49. Regeneron Pharmaceuticals climbed 3.9% to $422.38.
Taser International fell 3.4% to $18.49 after a plan stalled for the city of Los Angeles to buy Taser body cameras for almost all of its police officers.
Major stock indexes in Europe closed higher. Germany’s DAX rose 0.7%. The CAC-40 in France edged up 0.3%. Britain’s FTSE 100 index was up 0.2%.
In Asia, Japan’s Nikkei 225 index dropped 3.4% as a rising yen and earthquake-related production halts added to investor worries. Hong Kong’s Hang Seng index declined 0.7%. South Korea’s Kospi slid 0.3%. Australia’s S&P/ASX 200 fell 0.4%.
In other energy trading, wholesale gasoline fell about 2 cents to $1.44 a gallon. Heating oil was little changed at $1.24 a gallon. Natural gas rose 3.8 cents, or 2%, to $1.94 per 1,000 cubic feet.
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FOR THE RECORD
3:51 p.m.: An earlier version of this article incorrectly said natural gas rose 38 cents. It rose 3.8 cents.
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Precious and industrial metals futures ended narrowly mixed. Gold edged up 40 cents to $1,235 an ounce, silver slipped six cents to $16.25 an ounce and copper edged up a penny to $2.16 a pound.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.77% from 1.75 late Friday. In currency markets, the dollar rose to 108.82 yen from 108.70 yen. The euro rose to $1.1314 from $1.1288.
