Stocks rebound after brief wobble
U.S. stocks brushed aside their first wobble of the year and got back to setting records Thursday. Energy stocks led the way after the price of oil touched its highest level since 2014.
The gains for indexes marked a return to calm, after a whiff of nervousness wafted through markets Wednesday as interest rates rose. Rates held steady Thursday, and the Standard & Poor’s 500 index marked its seventh gain in the last eight days.
The market’s smooth ride upward hit a bump Wednesday: worries that a jump in interest rates could derail the ascent. Rates have been ultra-low since the Great Recession, a culmination of a decline in bond yields over the last threeplus decades.
“Everyone’s on edge about waiting for what’s to come,” even though central banks have promised to take a slow path toward higher rates, said Marina Severinovsky, investment strategist at Schroders.
“There shouldn’t be a falling-off-the-cliff mentality, but we’re so primed,” she said. “We’re 30 years into this, waiting for the trigger.”
Rates retreated Thursday after China’s foreign exchange regulator challenged a report that had helped drive up yields, which said China may slow or halt purchases of U.S. Treasurys. And a U.S. government report Thursday showed that inflation was weaker on the wholesale level last month than economists expected.
The yield on the 10-year Treasury note fell to 2.53% from 2.56%. It had been as high as 2.59% on Wednesday.
Although a quick jump in rates could jolt markets out of their calm ride, experts say markets are prepared for rates to rise gradually.
Energy stocks were the day’s biggest stars after the price of oil touched its highest price in more than three years. Benchmark U.S. crude rose 23 cents to settle at $63.80 a barrel; earlier in the day, it climbed as high as $64.77. Brent crude rose 6 cents to $69.26 a barrel.
That helped drive energy stocks in the S&P 500 to a 2% gain, the largest among the index’s 11 sectors. They’re at their highest level since the end of 2016. Anadarko Petroleum had one of the biggest gains in the index, jumping 5.6% to $58.50.
KB Home leaped 12.3% to $38.58 on Thursday after the Los Angeles home builder posted a bigger profit and better sales than expected.
The dollar fell to 111.09 yen from 111.35 yen. The euro rose to $1.2036 from $1.1957.
Gold rose $3.20 to settle at $1,322.50 an ounce. Silver fell 7 cents to $16.97 an ounce. Copper rose 2 cents to $3.23 a pound.
Natural gas rose 18 cents to settle at $3.08 per 1,000 cubic feet. Heating oil was nearly flat at $2.08 a gallon. Wholesale gasoline was steady at $1.84 a gallon.