Crude oil rises give boost to Wall Street markets after three-day dip
A jump in oil prices and some deal news helped send stocks up broadly Monday, breaking a three-day losing streak.
Investors bought from the start of trading, pushing oil drillers and other energy stocks up sharply. A bullish oil report from Goldman Sachs helped send benchmark US crude up 3.3% to its highest close in six months. All 10 sectors of the Standard and Poor's 500 index rose.
Major indexes were also boosted by news that billionaire investor Warren Buffett had invested in Apple, triggering a 3.7% jump in that stock. Apple is the most heavily weighted member of the S&P 500 and so a rise in its stock has an outsize impact on the index.
The S&P 500 rose 20.05 points, or 1%, to 2,066.66. The Dow Jones industrial average rose 175.39 points, or 1%, to 17,710.71. The Nasdaq composite index gained 57.78 points, or 1.2%, to 4,775.46
The report from Goldman argued that the glut in oil supplies has turned into a "deficit," and so prices could continue to rise. The sunny forecast, plus oil production troubles in Nigeria, pushed US crude up 1.51 US dollars to 47.72 dollars a barrel. A plunge in oil prices since mid-2014 has hammered energy company earnings, one reason why overall S&P 500 earnings have not risen since that year.
When oil prices climb, investors think the "earnings drought is at an end," said Tim Courtney, chief investment officer of Exencial Wealth Advisors. "Whatever happens to energy drives all the markets."
Energy shares in the S&P 500 rose 1.6% on Monday. Marathon Oil jumped 4% and Devon Energy also rose 4%.
In deal news, Tribune Publishing soared 2.61 dollars, or 23%, to 14.08 dollars after USA Today owner Gannett raised its offer to buy the publisher. The new offer comes one week after Tribune, which owns the Los Angeles Times, Chicago Tribune and other newspapers, adopted a "poison pill" plan to help it remain independent. Gannett rose 2.2%.
US interest rate policy could impact stocks this week. In addition to planned remarks from several Federal Reserve officials, the Fed is scheduled on Wednesday to release minutes of its last meeting.
Investors will be looking for clues as to whether the central bank is likely to raise rates from low levels that have helped push up stocks and other assets since the financial crisis. A report on Friday showed retail sales rose a solid 3% last month compared with the previous year, suggesting the Fed may be more likely to raise rates.
Anna Rathbun, director of research for investment manager CBIZ Retirement Plan Services, said investors are jittery, notwithstanding Monday's climb.
If the Fed raised rates, "the question is, 'What then?'" she said. "Will stocks and commodity prices fall again?"
The central bank's next two-day policy meeting begins on June 14.
In other stocks making moves, Memorial Resource Development rose 41 cents, or 3%, to 13.86 dollars per share after rival natural gas producer Range Resources said it would buy Memorial for 3.3 billion US dollars. Range Resources plunged 4.32 US dollars, or 10%, to 37.69 US dollars.