US stocks are pacing a rally in oil prices
New York (Feb 3) U.S. stocks were still on track to record a second-straight day of gains but were off their highs Tuesday afternoon, as equities tracked oil prices closely.
A jump in crude oil prices delivered a fillip to energy shares, while upbeat car sales, merger activity ad positive developments in Greece’s debt negotiations also boosted confidence.
Market reaction to weaker-than-expected factory orders was muted, as markets shrugged off a report indicating that manufacturing activity had slowed down in December. Factory orders fell 3.4% in December in fifth straight decline.
The S&P 500 SPX, +1.15% was higher, with eight of 10 main sectors trading higher. Energy sector stocks led the gains, boosted by a big jump in oil prices. The mood on Wall Street was optimistic with cyclical stocks outperforming defensive sectors. Small-cap stocks rallied, with Russell 2,000 RUT, +1.35% up 0.9%.
The Dow Jones Industrial Average DJIA, +1.54% jumped to a triple-digit-gain, and was up more than 160 points, at last check, with nearly all of its 30 members trading higher.
The Nasdaq Composite COMP, +0.65% dipped in and out of negative territory, but at last check was up 5.4 points.
Martin Leclerc, chief investment officer and portfolio manager at Barrack Yard Advisors, attributed volatility that has whipsawed stocks to investors trying to figure out whether to be risky or risk averse in their investing strategies.
“While indexes are relatively robust, individual stocks are not doing as well. There are more stocks that are down 10% than up 10%, for example. But that does not mean this bull market is about to end,” Leclerc said.
“We expect markets to get more ‘speculatively’ higher before seeing a big correction, given there is still a lot of central bank liquidity,” he added.
Global central-bank easing was a theme for Tuesday. Australia stocks hit a seven-year high after the Reserve Bank of Australia surprised markets by cutting rates to a record low.
“With yet another central bank cutting rates, the case for additional upside in equities remains intact,” said Brenda Kelly, chief market strategist at IG, in emailed comments. “Add to this the bounce in oil prices and we have some additional enthusiasm for risk assets.”
Late news that Greece has offered a debt-swap plan in a bid to end a standoff with its European partners boosted European equities. The Athens Composite Index GD, +11.27% shot up nearly 9%, driving a 1.2% gain for the Stoxx Europe 600 index SXXP, +0.82%
Source: MarketWatch
