Stocks jump as oil prices rise and Fed chief Janet Yellen calms investors
Stocks jumped Monday after Federal Reserve Chairwoman Janet L. Yellen again managed to soothe investors’ jangled nerves. The Standard & Poor’s 500 index made its highest close in 2016, and oil prices reached their highest levels of the year.
Market indexes were higher all day. They weakened a bit during Yellen’s remarks but rose further as investors concluded that the Fed won’t raise interest rates again until it is certain higher rates won’t stall the economy. Energy companies made the biggest gains as oil prices increased. Banks rose as investors anticipated that interest rates will eventually rise.
Investment manager Luke Bartholomew of Aberdeen Asset Management said Yellen was noncommittal after a weak jobs report Friday. But Bartholomew said the Fed’s decision won’t be based on a single report or economic indicator.
“There’s still a lot of data to go,” he said.
The Dow Jones industrial average gained 113.27 points, or 0.6%, to 17,920.33. The S&P 500 rose 10.28 points, or 0.5%, to 2,109.41. The Nasdaq composite index picked up 26.20 points, or 0.5%, to 4,968.71. The Nasdaq is close to its highs for the year.
Yellen’s remarks come after the government released a surprisingly weak jobs report for May on Friday. Yellen, who called that report “disappointing,” had said recently that the Fed would probably raise interest rates in the next few months if the economy kept strengthening. She did not repeat that comment Monday.
Benchmark U.S. crude oil rose $1.07, or 2.2%, to $49.69 a barrel in New York. That’s its highest closing price this year. Brent crude, which is used to price international oils, rose 91 cents, or 1.8%, to $50.55 a barrel in London. That brought energy companies higher. Exxon Mobil advanced 1.1% to $89.34.
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Independent energy analyst Jim Ritterbusch said oil prices rose because the dollar has weakened since the disappointing jobs report, and acts of sabotage in Nigeria have sapped that country’s oil production, boosting crude prices.
The price of oil has rebounded over the last few months, but it’s far lower than it was two years ago. That’s causing a lot of pain for energy companies.
Oil and gas exploration company Devon Energy said Monday it will sell almost $1 billion in assets later this year to shore up its financial position. That sent its stock up 4.6% to $37.56. Oilfield services company Hercules Offshore filed for Chapter 11 bankruptcy protection for the second time in less than a year. Hercules plans to sell all its assets to pay off investors, including international divisions. Its stock sank 6.4% to $1.32.
Rival oilfield service company Halliburton rose 4.8% to $44.89 and Baker Hughes jumped 7.1% to $49.52. Drilling rig company Transocean leaped 14.7% to $11.17 after Barron’s reported that the company won a contract for an operation that will be based off of India.
CF Industries climbed 8.9% to $31.15 and Mosaic rose 6.2% to $28.36. That helped pull materials and chemicals companies higher.
Drugmaker AbbVie slid 3.4% to $62.82 after investors were disappointed with results from a study of a lung cancer drug that the company is acquiring. In April, AbbVie agreed to buy StemCentrx for $5.8 billion, gaining the company’s stem cell treatment Ova-T in the process.
Food producer Tyson Foods slumped after a BMO Capital Markets analyst downgraded the food company to “market perform.” Tyson stock fell 3.7% to $60.88 but is up 49% over the last 12 months.
Gold rose $4.50 to $1,247.40 an ounce. Silver rose 8 cents to $16.45 an ounce. Copper was little changed at $2.12 a pound.
In other energy trading, wholesale gasoline fell 2 cents to $1.59 a gallon. Heating oil rose 2 cents to $1.50 a gallon. Natural gas rose 7 cents, or 2.8%, to $2.47 per 1,000 cubic feet.
The FTSE 100 index of leading British shares jumped 1% as polls showed voters there want Britain to leave the European Union. Britain will hold a referendum on membership in the 28-nation bloc June 23, and campaigning is heating up. The British pound weakened based on the latest polls.
Germany’s DAX rose 0.2% and France’s CAC 40 was little changed. Japan’s Nikkei 225 fell nearly 0.4%. Hong Kong’s Hang Seng rose 0.4%.
Bond yields recovered after Friday’s big drop. As bond prices fell, the yield on the 10-year U.S. Treasury note rose to 1.74% from 1.70%. The dollar rose to 107.40 yen from 106.68 yen. The euro inched up to $1.1373 from $1.1347.
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UPDATES:
2:26 p.m.: This article was updated with closing prices and additional information.
7:31 a.m.: This article has been updated with more recent prices and additional details.
This article was originally published at 7:06 a.m.
