Energy sector fuels stock gains

Energy companies powered to big gains Wednesday, leading the broader stock market higher, on reports that OPEC nations were moving closer to an agreement to cut oil production.

After stock trading closed, OPEC said it had reached a preliminary deal to reduce production for the first time in eight years.

“It just creates a lot of optimism that the worst is over for investors,” said Brian Youngberg, energy analyst at Edward Jones. The energy sector made its biggest gain since January.

A little more than two years ago, a barrel of oil cost around $100. But a glut built up as the U.S. and other nations produced more oil and the global economy slowed, hurting demand. Oil hit a low of $26 a barrel in February and has traded between $40 and $50 a barrel since April, but investors doubted that the price would rise further without production limits. OPEC produces more than a third of the world’s oil.

Benchmark U.S. crude rose 5.3% to $47.05 a barrel. Brent crude, the international standard, leaped 5.9% to $48.69. Exxon Mobil shares gained 4.4% to $86.90; Chevron rose 3.2% to $102.15.

Mining and industrial firms also rose. The Dow Jones industrial average was aided by a big gain for heavy machinery maker Caterpillar, which rose 4.5% to $86.59.

Phone companies suffered some of the largest declines. AT&T fell 1.5% to $40.85 after a UBS analyst downgraded it to “neutral” from “buy.” Analyst John Hodulik said profits will get squeezed as the companies offer trade-in deals to try to win customers.

Nike reported strongerthan-expected profit and sales, but its stock sank 3.8% to $53.25 as investors worried about challenges, including slower orders in North America. Nike is down 15% this year, the most of any stock in the Dow.

Mattress maker Tempur Sealy International plunged 22.4% to $57.77 after the company said third-quarter sales aren’t meeting expectations. It cut its guidance and said it expects revenue to fall up to 3% this year.

Deutsche Bank traded higher after the German bank said it would sell a life insurance subsidiary and emphasized that it was not seeking government aid. Its U.S.-listed stock rose 3.2% to $12.30.

Wholesale gasoline rose 8 cents, or 6%, to $1.48 a gallon. Heating oil rose 8 cents, or 5.8%, to $1.49 a gallon. Natural gas fell 4 cents to $2.95 per 1,000 cubic feet.

Bond prices slipped. The yield on the 10-year Treasury note rose to 1.57% from 1.56%. The dollar rose to 100.75 yen from 100.27 yen and the euro inched down to $1.1214 from $1.1221.

Gold fell $6.70 to $1,323.70 an ounce. Silver shed 4 cents to $19.12 an ounce. Copper rose 2 cents to $2.19 a pound.