By January 28, 2016 Read More →

US stocks move up as tech, energy companies rise

Energy companies stock boosted after talks on Russian oil production cuts

energy companies

Stocks in energy companies rose on Thursday as the price of oil climbed for the third straight day.  Statoil photo.

NEW YORK _ U.S. stocks rose Thursday as the price of oil climbed for the third day in a row on hopes that major oil exporters would cut production. Tech stocks traded higher, led by Facebook and PayPal, while drugmakers fell.

Facebook made its biggest leap in two and a half years after it said its profit more than doubled in the fourth quarter. The social network finished 2015 with almost 1.6 billion users. Sports apparel maker Under Armour also surged. Energy prices and companies rose after the Kremlin said it is discussing the state of the oil markets with Saudi Arabia and OPEC. Investors hope that talks between two of the three biggest oil producers in the world could lead to production cuts that would begin to alleviate a global supply glut.

The Dow Jones industrial average climbed 125.18 points, or 0.8 per cent, to 16,069.64. The Standard & Poor’s 500 index picked up 10.41 points, or 0.6 per cent, to 1,893.36. The Nasdaq composite index rose 38.51 points, or 0.9 per cent, to 4,506.68.

Stocks switched between small gains and losses throughout the morning. In the afternoon they gradually traded higher, but never went as high as they did at the very beginning of the day.

U.S. crude rose 92 cents, or 2.8 per cent, to $33.22 a barrel in New York. Brent crude, a benchmark for international oils, gained 79 cents, or 2.4 per cent, to $33.89.

The price of U.S. oil has climbed 9.5 per cent over the last three days as investors hope production will be reduced, which would strengthen the fuel’s price.

Oil prices have been on a long, steep slide since 2014 as world stockpiles hit extremely high levels and investors feared demand would get weaker. Last Wednesday U.S. oil closed at a 12-year low of $26.55 a barrel.

Oil and natural gas producer Devon Energy rose $2.30, or 9.4 per cent, to $26.79. Oil company Hess, which rose almost 6 per cent Wednesday after it said it will cut more spending, picked up another $3.49, or 9.5 per cent, to $40.34.

Facebook surged after reporting that its profit more than doubled in the fourth quarter. The social networking site gained another 46 million users, giving it 1.59 billion around the world. The stock rose $14.66, or 15.6 per cent, to $109.11, its best day since July 2013.

Facebook’s results lifted the four big-name “FANG” stocks: Facebook, e-commerce giant Amazon, streaming video company Netflix and search engine operator Google. Amazon advanced almost 9, while Google’s parent company, Alphabet, and Netflix both rose about 4 per cent.

“Since Facebook killed it yesterday, the others are enjoying a rally,” said Wedbush analyst Michael Pachter. “Facebook use is completely independent of Amazon use, but investors blindly bid up all of them when one does well.”

However Amazon reported disappointing fourth-quarter results after the market closed, and its shares tumbled 14 per cent in aftermarket trading.

E-commerce site eBay took its worst one-day loss in seven years after its guidance for the current quarter and the year disappointed investors. The stock lost $3.29, or 12.5 per cent, to $23.13. EBay’s former payment unit PayPal reported strong results and added $2.65, or 8.4 per cent, to $34.24. That was the best result for PayPal since the company was spun off from eBay in July.

“While it is safe to say Amazon won this holiday season, eBay clearly lost,” said Wedbush analyst Gil Luria.

Sports apparel maker Under Armour reported a larger-than-expected profit and better revenue than analysts had forecast. The company said shoe revenue almost doubled on strong sales of Stephan Curry basketball sneakers. Its stock climbed $15.49, or 22.1 per cent, to $84.07, for its biggest one-day gain in two years.

Drug stocks tumbled, and the biggest losses went to companies that make complex, costly drugs. Cancer drug maker Celgene lost $5.10, or 5 per cent, to $97.21 after its 2016 estimates disappointed investors.

The Massachusetts attorney general’s office said Wednesday it is investigating whether the high price of a new hepatitis C drug from another biotech firm, Gilead Sciences, violates state law. Gilead fell $2.10, or 2.3 per cent, to $87.53.

Biotech stocks have fallen in recent months as controversy over drug prices has increased. The Nasdaq biotech index fell 3.5 per cent Thursday. That index hit a record high in July and has lost about a third of its value since then.

Abbott Laboratories lost $3.76, or 9.3 per cent, to $36.71 after the maker of infant formula, medical devices and drugs posted quarterly profits that disappointed investors.

Quarterly earnings aided or pressured a wide variety of stocks. Construction and mining equipment maker Caterpillar reported better-than-expected results even though the company is struggling with lower commodity prices and a weakening global economy. It rose $2.76, or 4.7 per cent, to $61.08.

Computer network equipment maker Juniper Networks tumbled after releasing disappointing forecasts for the current quarter. The company also said its chief financial officer was leaving. The stock lost $4.08, or 15.4 per cent, to $22.46.

Overseas markets struggled after the Federal Reserve made cautious comments about the state of the global markets and growth in the U.S. Germany’s DAX fell 2.4 per cent and France’s CAC-40 gave up 1.3 per cent. The FTSE 100 index of leading British shares lost 1 per cent. Japan’s benchmark Nikkei 225 index gave up early gains to end 0.7 per cent lower.

The price of gold declined 20 cents to $1,115.60 an ounce. Silver fell 22.7 cents, or 1.6 per cent, to $14.232 an ounce. Copper lost 1.3 cents to $2.052 a pound.

In other energy trading, wholesale gasoline rose 3.3 cents to $1.079 a gallon. Heating oil rose 0.6 cents to $1.031 a gallon. Natural gas rose 2.5 cents to $2.182 per 1,000 cubic feet.

Bond prices rose. The yield on the 10-year Treasury note sipped to 1.98 per cent from 2 per cent. The euro rose to $1.0955 from $1.0907. The dollar rose to 118.78 yen from 118.64 yen.

The Canadian Press

Posted in: Energy Financial

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