Stocks rise, snapping their short losing streak
Energy and internet companies helped drive stocks on Wall Street broadly higher Thursday, snapping a two-day losing streak for the market in a choppy week of trading.
The gains were initially fueled by rising oil prices, which boosted energy companies after a suspected attack on two oil tankers in the Middle East’s strategic Strait of Hormuz. The energy sector sustained its gains, and a mix of media, internet and consumer-oriented companies took the lead in pushing every major index higher. Small-company stocks rose more than the rest of the market.
Investors have been searching for direction as they cautiously await any new developments in the U.S.-China trade war. Any continued escalations could crimp global economic growth and put the brakes on what is poised to be the longest economic expansion in U.S. history.
Anticipation of next week’s Federal Reserve meeting of policyholders helped lift the market Thursday, said Jeff Zipper, managing director at U.S. Bank Private Wealth Management.
“You’ve got two competing forces here right now,” Zipper said. “The lingering issue of when is this trade tariff deal going to get resolved, and a more dovish Fed.”
Last week, Fed Chair Jerome Powell set off a market rally after he signaled that the central bank is willing to cut interest rates to help stabilize the economy if the U.S.-China trade war crimps growth enough.
The Standard & Poor’s 500 index rose 11.80 points, or 0.4%, to 2,891.64 on Thursday. The benchmark index has been seesawing this week: It opened strong Monday, then fell for two days before reversing course again Thursday. The uneven week follows the index’s best week of 2019.
The Dow Jones industrial average rose 101.94 points, or 0.4%, to 26,106.77. The Nasdaq composite rose 44.41 points, or 0.6%, to 7,837.13. The Russell 2000 index of smaller-company stocks climbed 16.01 points, or 1.1%, to 1,535.80.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.10% from 2.12%.
U.S. stock indexes rebounded Thursday morning as oil prices surged on news of a suspected attack on two oil tankers in the Strait of Hormuz, between Iran and the Arabian Peninsula.
The incident in the strait comes amid heightened tensions between the United States and Iran. One-third of the oil traded by sea, which amounts to 20% of oil traded worldwide, passes through the strait. The United States blamed Iran in what it called a campaign of “escalating tensions” in a region crucial to global energy supplies.
Benchmark U.S. crude rose 2.2% to settle at $52.28 a barrel. Brent crude oil, the international standard, rose 2.2% to $61.31 a barrel. The gains come at a time when oil prices have been falling on signs demand is declining.
Analysts questioned whether the gains can hold. Jim Ritterbusch of Ritterbusch & Associates said in a note to clients that the jump is factoring in a worst-case scenario and that oil is “apt to relinquish the bulk of gains as additional details emerge.”
In addition, the Organization of the Petroleum Exporting Counties added to the recent concerns among traders that global demand is slipping. In its latest monthly report on the oil market, OPEC forecast demand would grow by 1.4 million barrels a day in 2019, down by 700,000 barrels a day from its previous forecast. OPEC said it lowered the forecast because of “sluggish oil demand data” from Western countries during the first quarter. While global demand appears to be slipping, supplies remain high.
The surge in oil prices lifted shares of oil services companies and oil producers. Schlumberger gained 3.4%.
Walt Disney climbed 4.4%, leading a mix of media and internet companies higher. Google parent Alphabet rose 1.1%. Facebook gained 1.4%.
Tapestry’s 3.9% gain led a mix of consumer-oriented stocks higher, including Macy’s, home improvement retailers Home Depot and Lowe’s, and homebuilders. Those companies caught an extra boost from the latest mortgage rate figures, which remain near historic lows.
Mortgage buyer Freddie Mac says the average rate on the 30-year fixed-rate mortgage held steady from last week at 3.82%, its lowest point since September 2017. Lennar and KB Home shares each rose 1.9%.
Solid earnings and forecasts helped lift several stocks.
Lululemon gained 2.1% after stretching beyond Wall Street’s profit and revenue forecasts for the first quarter. The maker of athletic apparel popular with yoga practitioners also raised its profit forecast for the year.
Furniture and houseware retailer RH surged 15.8% after the company blew past Wall Street’s first-quarter profit forecasts and raised its own profit forecast for the year. The company said that it raised some prices to offset the effect of tariffs and plans to move some production out of China.
Higher fares gave major airlines a boost. American Airlines confirmed that it raised domestic fares $5 each way. J.P. Morgan said Southwest Airlines followed by raising prices on tickets bought within a week of the flight and favored by business travelers. They were the second round of fare increases in just over a month.
American Airlines shares surged 6.4%, Delta gained 1.9% and Southwest rose 3.1%.
Healthcare stocks lagged behind the overall market.
Wholesale gasoline rose 2% to $1.72 a gallon. Heating oil rose 1.5% to $1.81 a gallon. Natural gas fell 2.6% to $2.33 per 1,000 cubic feet.
Gold rose 0.4% to $1,336.80 an ounce. Silver inched up 0.1% to $14.75 an ounce. Copper fell 0.7% to $2.65 a pound.
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