Energy stocks power market
NEW YORK — 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.
Energy companies surged at 2 p.m. on reports that a deal was close. A twoyear slump in oil prices has decimated profits at energy companies. The energy sector made its biggest gain since January.
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 Dow Jones industrial average rose 110.94 points, or 0.6 percent, to 18,339.24. The Standard & Poor’s 500 index added 11.44 points, or 0.5 percent, to 2,171.37. The Nasdaq composite edged up 12.84 points, or 0.2 percent, to 5,138.55.
A little more than two years ago, a barrel of oil cost around $100. But a huge supply glut built up as the U.S. and other countries produced more and more oil and the global economy slowed, which hurt demand.
Oil hit a low of $26 a barrel in February and has traded between $40 a $50 a barrel since April. OPEC produces more than a third of the world’s oil.
Benchmark U.S. crude jumped $2.38, or 5.3 percent, to $47.05 a barrel in New York. Brent crude, the international standard, rose $2.72, or 5.9 percent, to $48.69 a barrel in London.
Exxon Mobil picked up $3.66, or 4.4 percent, to $86.90 and Chevron leaped $3.17, or 3.2 percent, to $102.15.
Oil prices jumped 3 percent Monday and then fell 3 percent Tuesday as hopes for a production deal rose and fell, and oil repeatedly changed course Wednesday as well.
Mining and industrial companies also climbed. The Dow was aided by a big gain for heavy machinery maker Caterpillar, which climbed $3.71, or 4.5 percent, to $86.59.
Phone companies suffered some of the largest declines. AT&T fell 61 cents, or 1.5 percent, to $40.85 after a UBS analyst downgraded the company to “Neutral” from “Buy.” Analyst John Hodulik said profits will get squeezed as the companies offer tradein deals to try to win customers. He cut his profit forecast for Verizon, which lost 43 cents to $52.06.