Energy companies lead stocks higher
NEW YORK (AP) — U.S. stocks climbed Tuesday as the price of oil made its biggest jump in seven months and energy companies rose with it. Technology stocks like Microsoft and Google’s parent Alphabet traded higher and bond yields slipped, a break with the pattern since last week’s election.
Oil rose almost 6 percent as investors once again grew hopeful that the OPEC cartel will agree to cut fuel production in a few weeks. Companies like utilities and telecom service providers climbed as bond yields fell slightly after a week of large gains. Airlines rose after Warren Buffett made a surprise investment in three carriers.
“The market somehow decided ‘let’s give the Trump presidency a chance,” said John DeClue, chief investment officer for U.S. Bank’s private client reserve. However DeClue said the bond market could struggle with Trump in the White House: if taxes are cut and government spending rises sharply, that could lead to climbing deficits that would trouble investors in U.S. government debt.
The Dow Jones industrial average picked up 54.37 points, or 0.3 percent, to 18,923.06, as those gains were partly held back by losses for retailer Home Depot and aerospace company Boeing. The Standard & Poor’s 500 index rose 16.19 points, or 0.7 percent, to 2,180.39. The Nasdaq composite added 57.23 points, or 1.1 percent, to 5,275.62.
Energy companies like Exxon Mobil and Occidental Petroleum made large gains as the price of oil rose by the largest amount since early April. At least for a day, investors were hopeful that the nations of OPEC will be able to hammer out a deal to cut oil production, which would boost prices. OPEC agreed to a preliminary deal in September but still have to work out important details.
Benchmark U.S. crude gained $2.49, or 5.7 percent, to $45.81 per barrel in New York. Brent crude, used to price international oils, rose $2.52, or 5.7 percent, to $46.95 a barrel in London. Exxon rose $1.54, or 1.8 percent, to $86.82 and Apache added $4.46, or 7.6 percent, to $63.39.
Tuesday’s trading was a partial reversal of the moves investors have made since the presidential election one week ago. Tech stocks have been losing ground recently, but Microsoft picked up $1.14, or 2 percent, to $58.87 and graphics processor maker Nvidia rose $2.55, or 3 percent, to $86.19.
Bond prices edged higher, sending long-term interest rates slightly lower. Bond prices had fallen sharply since the election over worries that President-elect Donald Trump’s spending plans would lead to higher inflation. That had sent yields to their highest levels this year. But the yield on the 10-year Treasury note declined to 2.23 percent from 2.27 percent. Companies that pay large dividends, like phone companies, also changed course and rose.
However the dollar continued to get stronger and reached its highest level in almost a year. It rose to 109.32 yen from 108.51 yen. The euro slid to $1.0718 from $1.0726.
Billionaire investor Warren Buffett’s Berkshire Hathaway bought stock in United Continental, American Airlines and Delta. Buffett has avoided the volatile industry in the past, but his holding company disclosed stakes in each company in a form filed with the Securities and Exchange Commission. United picked up $3.12, or 5 percent, to $66.06 and American gained $1.36, or 3.1 percent, to $44.76.
Aerospace giant Boeing fell after United said that it will postpone delivery of 61 new Boeing 737 jets that it planned to buy. It will convert the orders to a new, more fuel-efficient model that Boeing calls the 737 Max. Boeing stock lost $1.88, or 1.3 percent, to $148.11.
Retail sales climbed 0.8 percent in October as consumers spent more money on products including cars and home and garden supplies. Retail sales over last two months have been the strongest in more than two years, which shows consumers are still spending.
The report showed continued gains for online retailers. Amazon jumped $24.17, or 3.4 percent, to $743.24 while department stores traded lower as they continued to lose sales.
Equity One will combine with Regency Center in a deal that combines two real estate investment trusts that own shopping centers. The two companies have more than 400 properties, most of them anchored by grocery stores. Equity One climbed $1.90, or 6.8 percent, to $29.77 while Regency Center lost $2.95, or 4.2 percent, to $66.91.
Chinese e-commerce company JD.com climbed after it reported strong quarterly results. The company also said it might reorganize its JD Finance unit, which runs its internet finance business. JD.com said expects to sell its stake in the company and that JD Finance will be owned solely by Chinese investors. The stock climbed $2.70, or 11.4 percent, to $26.41.
In other energy trading, wholesale gasoline rose 6 cents, or 4.5 percent, to $1.34 a gallon. Heating oil picked up 6 cents, or 4.2 percent, to $1.44 a gallon. Natural gas lost 4 cents to $2.71 per 1,000 cubic feet.
Gold rose $2.80 to $1,224.50 an ounce. Silver picked up 15 cents to $17.04 an ounce, while copper gave up 2 cents to $2.51 a pound.
Britain’s FTSE 100 index rose 0.6 percent and the CAC-40 in France was also 0.6 percent higher. Germany’s DAX gained 0.4 percent. Seoul’s Kospi shed 0.3 percent and the Nikkei 225 in Japan finished little changed. Hong Kong’s Hang Seng gained 0.5 percent.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at http://bigstory.ap.org/journalist/marley-jay
Copyright 2016 The Associated Press.