Thursday, March 23, 2023

US Stocks Post Solid Gain on Rising Oil Prices

By on February 25, 2016

A Wall Street address carved into the side of a building in New York. (AP Photo/Mark Lennihan, File)

A Wall Street address carved into the side of a building in New York. (AP Photo/Mark Lennihan, File)

NEW YORK – A late-day surge pushed U.S. stocks sharply higher Thursday, propelled by a recovery in energy companies and bank stocks, which have been hit hard this year.

Investors were also encouraged by positive economic data, including improved orders for long-lasting goods that served as a sign that businesses were buying equipment and investing in their operations.

The Dow Jones industrial average rose 212.30 points, or 1.3 percent, to close at 16,697.29. The Standard & Poor’s 500 index rose 21.90 points, or 1.1 percent, to close at 1,951.70 and the Nasdaq composite rose 39.60 points, or 0.9 percent, to close at 4,582.20.

Stocks had been flat to slightly higher most of the day but added to their gains in the last hour of trading. The market – as it has done for weeks now – largely tracked the price of oil. U.S. crude oil closed up 92 cents, or nearly 3 percent, to $33.07 a barrel while Brent crude, the global benchmark, rose 88 cents, or 2.6 percent, to $35.29 a barrel.

“Oil and the stock market are going to keep moving in tandem like this until oil prices stabilize,” said Jeremy Zirin, chief equity strategist at UBS Wealth Management.

Bank stocks got a reprieve Thursday after several weeks of downward pressure. The financials sector was the biggest gainer in the S&P 500. Morgan Stanley rose 4 percent, Goldman Sachs rose 2 percent, while the big retail banks Bank of America, U.S. Bancorp and Citigroup were up more than 1 percent each.

Bank stocks have been hit hard this year on expectations that the Federal Reserve will now be reluctant to raise interest rates, which boost bank profits, and that low oil prices will continue to cause banks to write off energy loans.

“The fears about the banks are entirely about profitability. Investors were expecting the Fed to raise rates three to four times this year, now we are looking at maybe one interest rate hike,” Zirin said.

Orders to U.S. companies for long-lasting manufactured goods rose in January at the strongest pace in 10 months, the government said Thursday. A key category that tracks business investment surged by the largest amount in 19 months. The bigger-than-expected gains could be a sign of better days ahead for the nation’s beleaguered manufacturers.

The biggest gainer in the S&P 500 Thursday was, which jumped $6.90, or 11 percent, to $69.42 after the company issued an upbeat outlook for the year. Investors had been worried about the results of Salesforce after a competitor, Tableau, issued a dismal outlook earlier this month that caused its shares to drop nearly 50 percent, dragging down its competitors.

Both U.S. and European markets fared well despite a sharp drop in Chinese stocks overnight. The Shanghai composite fell 6.4 percent on renewed concerns about the country’s manufacturing sector and market liquidity.

Bond prices rose, with the yield on the 10-year U.S. Treasury note falling to 1.71 percent from 1.75 percent on Wednesday.

In other energy trading, heating oil rose 1 cent, or 1 percent, to $1.07 a gallon, wholesale gasoline rose 4.6 cents, or 4.5 percent, to $1.056 a gallon and natural gas fell 6.7 cents, or 4 percent, to $1.711 per 1,000 cubic feet.

In metals, gold fell 30 cents to $1,238.80 an ounce and silver fell 13 cents to $15.20 an ounce. High-quality copper fell 2.8 cents to $2.073 a pound.

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