Stocks post solid gains, and oil prices surge
Technology companies and banks helped power U.S. stocks to solid gains Wednesday, improving on the market’s flat finish the day before.
Energy stocks led the gainers as the price of crude oil climbed back above $70 a barrel the day after the U.S. moved to withdraw from a nuclear accord with Iran. Industrial and materials companies rose, outweighing losses in safer-play sectors such as utilities and phone companies.
“The areas of strength that you’re seeing today are encouraging,” said Willie Delwiche, investment strategist at Baird. “Energy, financials, materials and industrials. Those are more cyclical areas of the market, and that speaks to economic strength and a risk appetite on the part of investors.”
The Standard & Poor’s 500 index rose 25.87 points, or 1%, to 2,697.79. The gain nudged the benchmark index into positive territory for the year. The Dow Jones industrial average posted its fifth gain in a row, climbing 182.33 points, or 0.7%, to 24,542.54.
The Nasdaq climbed 73 points, or 1%, to 7,339.91. The Russell 2000 index of smaller-company stocks ticked up 9.66 points, or 0.6%, to 1,596.05.
The indexes are on track to end the week with solid gains.
Electronic Arts led a tech-sector rally, climbing 5.7% to $131.01 after the video game maker posted quarterly results that beat forecasts.
TripAdvisor soared 22.8% to $47.62 after the online travel booking company reported earnings that were much higher than analysts expected. It also raised its annual forecast.
Energy-sector stocks racked up the biggest gain as crude oil prices rebounded, the day after the Trump administration moved to withdraw the United States from a 2015 nuclear accord with Iran and reinstate sanctions on the country.
“We’ve had some noise from Iran, but some of the underlying [oil market] trends are probably still intact in terms of a recovering economy, high demand and higher inflation,” Delwiche said.
Benchmark U.S. crude oil jumped $2.08, or 3%, to $71.14 a barrel in New York. That’s the highest level in more than three years. Brent crude, which is used to price international oils, leaped $2.36, or 3.2%, to $77.21 a barrel in London.
The rise in oil prices sent energy stocks higher. Occidental Petroleum rose 5.4% to $82.40.
Bond prices fell. The yield on the 10-year Treasury rose to 3% from 2.98%. The rise in yields pushed up interest rates, which enables banks to make more money from loans. Financial stocks rose. Bank of America shares advanced 2.6% to $30.72.
Home builders retreated as interest rates rose and the Mortgage Bankers Assn. said mortgage applications fell. KB Home shares sank 5.1% to 26.15. D.R. Horton slid 2.9% to $43.63.
Some companies’ quarterly results put investors in a selling mood.
Monster Beverage slumped 7.5% to $49.11 after the energy drink maker reported disappointing first-quarter sales and said its profit margins decreased.
Papa John’s International slid 3.7% to $56.55 after the pizza chain’s first-quarter results fell short of analyst estimates.
Walt Disney’s better-than-expected results also failed to impress traders, who took a dim view of the entertainment company’s struggling ESPN network. Disney shares fell 1.8% to $99.97.
Walmart slid 3.1% to $83.06 after the retailer agreed to buy a 77% stake in India’s Flipkart in a $16-billion deal. The move is Walmart’s biggest acquisition yet and reflects the retailer’s focus on growth opportunities as it tries to narrow the gap between itself and Amazon.com.
The dollar strengthened to 109.72 yen from 109.02. The euro rose to $1.1861 from $1.1858.
Gold slipped 70 cents to $1,313 an ounce. Silver rose 7 cents to $16.54 an ounce. Copper was little changed at $3.06 a pound.
Heating oil rose 6 cents to $2.22 a gallon. Wholesale gasoline rose 6 cents to $2.17 a gallon. Natural gas rose a penny to $2.74 per 1,000 cubic feet.
Major indexes in Europe finished higher. Germany’s DAX and France’s CAC 40 both rose 0.2%. Britain’s FTSE 100 climbed 1.3%.
In Asia, Japan’s Nikkei 225 dropped 0.4% and South Korea’s Kospi fell 0.2%. Hong Kong’s Hang Seng index rose 0.4%. Stocks rose in Taiwan, Singapore and Indonesia but fell in Thailand and the Philippines. Australia’s S&P/ASX 200 advanced 0.3%.
UPDATES:
2 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 11:25 a.m.
