Stocks climb as energy shares rally
Stocks rose Wednesday, the seventh anniversary of the bull market, as crude oil resumed its climb from a 13year low.
The gains were modest as investors await key policy decisions from Europe’s central bank Thursday and from the U. S. Federal Reserve next week. Energy companies rebounded from big drops the day before, gaining 1.5%.
The stock market has been climbing for three weeks as reports on hiring, retail spending and manufacturing suggest that the U. S. economy is strengthening and that fears are overblown that a slowdown in China would tip the U. S. into recession. The Standard and Poor’s 500 index is up 9% from its mid- February low.
“People are becoming more optimistic and markets are recovering,” said Seth Masters, chief investment officer at AB Bernstein. The hope is that “monetary authorities are committed to doing what it takes and not derail it.”
Wednesday’s gains were broad, with nine of 10 industry sectors of the S& P 500 rising. The jump in crude sent several energy companies soaring.
The S& P 500 has tripled since bottoming out at 676.53 seven years ago during the financial crisis. Stocks have been buoyed by higher corporate earnings, though not in the last year, and by the Federal Reserve’s efforts to encourage investors to take more risk by lowering interest rates on bonds and other safer assets.
Krishna Memani, chief investment officer at Oppenheimer Funds, said he’s optimistic the bull market will extend its run because modest economic growth means little inf lation, and no need for the Fed to rush to reverse its stimulus policies.
The Fed meets next week, but most investors do not think it will raise shortterm interest rates.
On Thursday, the European Central Bank is widely expected to announce more efforts to stimulate the 19country Eurozone. Possible moves include another cut in the deposit rate for funds from commercial banks to even further below zero. The ECB also could increase its bond- buying program.
Gold slipped $ 5.50 to $ 1,257.40 an ounce, silver fell 2 cents to $ 15.37 an ounce and copper rose 1 cent to $ 2.23 a pound.
Benchmark U. S. crude rose $ 1.79, or 5%, to $ 38.29 a barrel. Brent crude climbed $ 1.42, or 3.6%, to $ 41.07. Wholesale gasoline rose 8.3 cents to $ 1.471 a gallon, heating oil rose 3.3 cents to $ 1.233 a gallon and natural gas rose 4 cents to $ 1.752 per 1,000 cubic feet.
U. S. government bond prices fell. The yield on the 10- year Treasury note rose to 1.88% from 1.83%.
The euro was f lat at $ 1.1002. The dollar edged up to 113.36 yen from 112.61 yen.