Wall Street buoyant after leap in oil prices inspires investors
A jump in oil prices helped pull US stocks to record highs on Monday as investors continue to hope for a cut in oil production that could help prices go higher.
The start of the week once again brought several corporate deals, with companies in the energy and technology industries making big moves.
The price of oil rose about 4% as investors hope the countries in Opec which collectively produce more than a third of the world's oil, will soon finalise a deal that would lower oil production and help support prices. The gains were widespread, with technology, basic materials and utility companies all moving higher.
Stocks reached all-time highs over the summer and have built on those gains since the election. On Monday the Dow Jones industrial average, Standard & Poor's 500, and Nasdaq composite all set records. So did the Russell 2000, an index of smaller companies, and the S&P's small- and mid-size company indexes. The last time all those indexes set records on the same day was December 31 1999, according to Ryan Detrick, senior market strategist for LPL Financial.
The Dow rose 88.76 points, or 0.5%, to 18,956.69. The S&P 500 climbed 16.28 points, or 0.7%, to 2,198.18. The Nasdaq composite jumped 47.35 points, or 0.9%, to 5,368.86.
Benchmark US crude oil rose to its highest price this month. It gained 1.80 dollars, or 3.9%, to 47.49 dollars a barrel while Brent crude, the international standard, rose 2.04 dollars, or 4.4%, to 48.90 dollars a barrel in London. That led to gains for energy companies. Marathon Oil added 86 cents, or 5.5%, to 16.48 dollars and Exxon Mobil added 1.21 dollars, or 1.4%, to 86.49 dollars.
Opec representatives will meet in Vienna on November 30. They have agreed to preliminary terms of a deal that will trim oil production, but the details remain to be determined. Quincy Krosby, market strategist at Prudential Financial, said investors are encouraged by the effort, but she does not think a deal, if one happens, will have much effect on oil prices.
"There's nothing to suggest the agreement's going to hold," she said. "When all is said and done, supply and demand will ultimately dictate the price."
Meat producer Tyson Foods tumbled 9.76 dollars, or 14.5%, to 57.60 dollars. The company's fourth-quarter profit and sales fell far short of Wall Street's forecasts as Tyson's chicken business struggled. The company also said chief executive Donnie Smith will step down at the end of this year, and company president Tom Hayes will replace him.
Competitor Hormel Foods lost 64 cents, or 1.8%, to 34.94 dollars.
Small-company stocks have surged since the election. The Russell 2000 has risen for 12 days in a row.
Technology stocks also made substantial gains. They have lagged in the market since the election after very strong performance over the summer. Facebook rose 4.75 dollars, or 4.1%, to 121.77 dollars while online payments company PayPal advanced 55 cents, or 1.4%, to 40.63 dollars and Apple picked up 1.69 dollars, or 1.5%, to 111.75 dollars.
Identity theft and fraud protection company LifeLock jumped 3.06 dollars, or 14.7%, to 23.81 dollars after security software maker Symantec agreed to buy the company for 2.3 billion dollars. The deal values LifeLock at 24 dollars a share. Symantec picked up 77 cents, or 3.2%, to 24.52 dollars, a sign investors approve of the purchase.
Sunoco Logistics agreed to buy Energy Transfer Partners in an all-stock deal worth about 20 billion dollars. Both companies are involved in the Dakota Access oil pipeline, a project that's been the subject of protests for months. A portion of that pipeline would pump oil under Lake Oahe, a reservoir in North Dakota, and the local Standing Rock Sioux tribe says it fears a leak could contaminate the drinking water on its reservation. The tribe also says the pipeline could disturb sacred sites.
Both companies traded lower after the deal was announced, as they won't distribute as much cash to shareholders after combining. Energy Transfer Partners lost 2.85 dollars, or 7.2%, to 36.52 dollars and Sunoco Logistics skidded 1.72 dollars, or 6.6%, to 24.47 dollars. Energy Transfer Equity, the general partner of Energy Transfer Partners, picked up 63 cents, or 3.6%, to 17.92 dollars.
Gold inched up 1.10 dollars to 1,209.80 dollars an ounce. Silver lost 10 cents to 16.52 dollars an ounce. Copper climbed five cents, or 1.9%, to 2.52 dollars a pound.
The dollar slipped after trading at 13-year highs last week. The euro rose to 1.0612 from 1.0599 dollars. The dollar rose to 111.07 yen from 110.63 yen.
Bond prices rose. The yield on the 10-year Treasury note slipped to 2.32% from 2.35%. That helped utility stocks. They stocks tend to do better when bond yields fall because investors seeking income buy them for their big dividends.
In other energy trading, wholesale petrol gained six cents, or 4.3%, to 1.40 dollars a gallon. Heating oil rose seven cents, or 4.6%, to 1.52 dollars per gallon. Natural gas rose 11 cents, or 4%, to 2.95 dollars per 1,000 cubic feet.
France's CAC-40 index rose 0.6% while the DAX of Germany picked up 0.2%. The FTSE 100 index in Britain rose less than 0.1%. The Nikkei 225 of Japan rose 0.8%. South Korea's Kospi dipped 0.4% and the Hang Seng in Hong Kong edged up less than 0.1%.