Stocks jump as crude oil price soars

Energy sector hopes for easing of tensions between Saudis, Russia

Energy stocks propelled the broader stock market higher Thursday, as hopes that Saudi Arabia and Russia could step back from their price war offset lingering worries about a faltering jobs market. The Dow Jones Industrial Average jumped 469.93 points to close at 21,413.44, a day after the blue-chip index shed nearly 1,000 points at the start of a new quarter. The Standard & Poor’s 500 jumped 2.3% to finish at 2,526.90, led by gains in the energy sector as the price of crude surged. Shares of Exxon Mobil and Chevron gained 7.6% and 11%, respectively. Crude, which is coming off its worst quarter in history, soared 24% to settle at $25.32 per barrel, its best one-day percentage gain ever. Oil prices jumped after President Donald Trump said he was confident that Saudi Arabia and Russia would resolve their dispute over oil output and prices in the coming days. Trump told CNBC Thursday that he expects both countries to cut production by about 10 million barrels. “Energy is a beaten down sector that’s been rallying on hope,” says Tim Bray, senior portfolio manager at GuideStone Capital Management. “The recent decline in oil prices came after Saudia Arabia started a price war. But it’s only a matter of time before they come together with Russia and agree to some type of production cut because most OPEC countries aren’t going to be satisfied with oil hovering around $20.” The gains come despite more people applying for unemployment insurance as segments of the economy shut down in the wake of the outbreak. The number of Americans who filed claims for unemployment surged to a record 6.6 million last week, the Labor Department reported Thursday, as the pandemic caused layoffs and furloughs. That was double the previous week’s total of nearly 3.3 million. Investors will monitor monthly jobs data, due Friday, for further indications on how the pandemic has affected the U.S. economy. “This is eye-watering, and we are still only at the beginning of the layoffs spurred by the lockdowns throughout the country,” James McCann, senior global economist at Aberdeen Standard Investments, said in a note. “When we look at all the jobs at direct risk from social distancing policies, and those which could be affected indirectly, the numbers start to get pretty scary. Unemployment could well rocket in coming months to more than 10%.” The S&P 500 index is coming off its worst quarter since the financial crisis in 2008, with a 20% loss. Traders said markets will be turbulent until the number of new coronavirus cases declines. Bank of America Global Research revised its economic projections for the year. Analysts at the firm forecast three consecutive quarters of contraction: The U.S. economy is likely to shrink 7% in the first quarter, 30% in the second quarter and 1% in the third quarter. The bank projects growth will recover in the final three months of the year.