Energy companies lead stocks higher as oil price soars; tech stocks also rise
U .S. stocks climbed Tuesday as the price of oil made its biggest jump in seven months and energy companies rose with it. Technology stocks such as Microsoft and Alphabet, Google’s parent, traded higher and bond yields slipped, a break with the pattern since last week’s election.
Oil rose almost 6% as investors once again grew hopeful that the OPEC cartel will agree to cut fuel production in a few weeks. Companies such as utilities and telecom service providers climbed as bond yields fell slightly after a week of large gains. Airlines rose after Warren Buffett made a surprise investment in three carriers.
“The market somehow decided, ‘Let’s give the Trump presidency a chance,’” said John DeClue, chief investment officer for U.S. Bank’s private client reserve. However, DeClue said the bond market could struggle with President-elect Donald Trump in the White House: If taxes are cut and government spending rises sharply, that could lead to climbing deficits that would trouble investors in U.S. government debt.
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The Dow Jones industrial average rose 54.37 points, or 0.3%, to 18,923.06; its gains were partly held back by losses for retailer Home Depot and aerospace company Boeing. The Standard & Poor’s 500 index rose 16.19 points, or 0.7%, to 2,180.39. The Nasdaq composite advanced 57.23 points, or 1.1%, to 5,275.62.
Energy companies including Exxon Mobil and Occidental Petroleum made large gains as the price of oil rose by the largest amount since early April. At least for a day, investors were hopeful that the nations of OPEC will be able to hammer out a deal to cut oil production, which would boost prices. OPEC agreed to a preliminary deal in September but still has to work out important details.
Benchmark U.S. crude jumped 5.7% to $45.81 a barrel. Brent crude, used to price international oils, rose 5.7% to $46.95 a barrel. Exxon shares rose 1.8% to $86.82; Apache climbed 7.6% to $63.39.
Tuesday’s trading was a partial reversal of the moves investors have made since the Nov. 8 presidential election. Tech stocks have been losing ground recently, but Microsoft picked up 2% to $58.87 and graphics processor maker Nvidia rose 3% to $86.19.
Bond prices edged higher, sending long-term interest rates slightly lower. Bond prices had fallen sharply since the election over worries that Trump’s spending plans would lead to higher inflation. That had sent yields to their highest levels this year. But the yield on the 10-year Treasury note declined to 2.23% on Tuesday from 2.27%. Companies that pay large dividends, such as phone companies, also changed course and rose.
However, the dollar continued to grow stronger and reached its highest level in almost a year. It rose to 109.32 yen from 108.51 yen. The euro slid to $1.0718 from $1.0726.
Billionaire investor Warren Buffett’s Berkshire Hathaway bought stock in United Continental, American Airlines and Delta. Buffett has avoided the volatile industry in the past, but his holding company disclosed stakes in each company in a form filed with the Securities and Exchange Commission. United shares climbed 5% to $66.06; American rose 3.1% to $44.76.
Aerospace giant Boeing fell 1.3% to $148.11 after United said it will postpone delivery of 61 new Boeing 737 jets that it planned to buy. It will convert the orders to a new, more fuel-efficient model that Boeing calls the 737 Max.
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Retail sales climbed 0.8% in October as consumers spent more money on products including cars and home and garden supplies. Retail sales over last two months have been the strongest in more than two years, which shows consumers are still spending.
The report showed continued gains for online retailers. Amazon jumped 3.4% to $743.24, and department stores traded lower as they continued to lose sales.
Read more: Retail sales jump as holiday shopping season nears »
Equity One will combine with Regency Centers in a deal that combines two real estate investment trusts that own shopping centers. The two companies have more than 400 properties, most of them anchored by grocery stores. Equity One shares climbed 6.8% to $29.77, and Regency Centers fell 4.2% to $66.91.
Chinese ecommerce company JD.com climbed 11.4% to $26.41 after it reported strong quarterly results. The company also said it might reorganize its JD Finance unit, which runs its Internet finance business. JD.com said expects to sell its stake in the company and that JD Finance will be owned solely by Chinese investors.
Wholesale gasoline rose 6 cents, or 4.5%, to $1.34 a gallon. Heating oil rose 6 cents, or 4.2%, to $1.44 a gallon. Natural gas fell 4 cents to $2.71 per 1,000 cubic feet.
Gold rose $2.80 to $1,224.50 an ounce. Silver rose 15 cents to $17.04 an ounce. Copper fell 2 cents to $2.51 a pound.
Britain’s FTSE 100 index and the CAC-40 in France each rose 0.6%. Germany’s DAX gained 0.4%. Seoul’s Kospi shed 0.3%, and the Nikkei 225 in Japan finished little changed. Hong Kong’s Hang Seng gained 0.5%.
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UPDATES:
2:30 p.m.: This article was updated with the close of markets, context and analysis.
This article was originally published at 9:50 a.m.
