By March 1, 2016 Read More →

As oil prices stabilize, increase slightly, stocks snap higher

oil prices

Oil prices and the dollar seem to have stabilized, giving investors encouraging signs in the strength of the US economy.  Husky Energy photo.

Oil prices moved higher Tuesday

NEW YORK _ Stocks roared to their best day in more than a month Tuesday as investors hit the “buy” button following some encouraging signs of strength in the U.S. economy. Construction spending reached its highest level in eight years in January. Banks, the worst-performing sector of the market so far this year, led the way higher.

Stocks jumped at 10 a.m., when the Commerce Department reported that construction spending continued to rise in January. At the same time, a survey showed some signs of life in the beaten-down manufacturing sector. Those were good signs for the U.S. economy.

Banks rose the most, but big names in consumer and tech stocks also climbed, as did oil prices.

The Dow Jones industrial average jumped 348.58 points, or 2.1 per cent, to 16,865.08. The Standard & Poor’s 500 index surged 46.12 points, or 2.4 per cent, to 1,978.35. That was the biggest gain for the S&P 500, a widely used benchmark, since late January.

The Nasdaq composite index, which is heavily weighted with technology companies, made its biggest gain since August, adding 131.65 points, or 2.9 per cent, to 4,689.60.

Stocks have stumbled this year as investors feared for the health of the U.S. economy at the same time that China, Europe, and Japan are slowing or struggling. Tuesday’s report showed construction spending rose by the most in eight months. A manufacturing index had its best reading in six months, though activity is still declining.

Bank of America picked up 67 cents, or 5.4 per cent, to $13.19 and JPMorgan Chase gained $2.90, or 5.2 per cent, to $59.20, leading financial stocks higher. The S&P 500’s financial component has slumped about 9 per cent this year, worse than any other industry, as investors worry about loans banks have made to energy companies and low interest rates.

In recent months the strong dollar has hurt tech stocks, which do a lot of business outside the U.S., because it makes their products more expensive overseas and cuts into their revenue. Those stocks climbed Tuesday, with the biggest gains going to familiar names. Apple gained $3.84, or 4 per cent, to $100.53. It had been more than a month since Apple stock closed above $100. Alphabet, the parent of Google, rose $24.95, or 3.5 per cent, to $742.17. Microsoft picked up $1.70, or 3.3 per cent, to $52.58 and Facebook stock added $2.90, or 2.7 per cent, to $109.82.

Karyn Cavanaugh, senior markets strategist for Voya Investment Management, said investors abandoned tech and bank stocks as the market slumped in January and February.

“They’ve just been beaten with a stick this year,” she said. “Earnings have not been that bad and the companies’ financials are not that bad.”

Cavanaugh said investors are pleased with the construction and manufacturing reports, and relieved that the dollar and oil prices seem to have stabilized.

Agribusiness giant Monsanto gained $2.50, or 2.8 per cent, to $92.49 and chemical maker DuPont rose $2.07, or 3.4 per cent, to $62.94. Among consumer stocks, Amazon rose $26.52, or 4.8 per cent, to $579.04 and Netflix gained $4.89, or 5.2 per cent, to $98.30.

Most automakers reported big gains in their February U.S. sales. Ford climbed 58 cents, or 4.6 per cent, to $13.09 after its sales rose almost 20 per cent, a better gain than analysts expected. Honda, Fiat Chrysler and Nissan also reported big improvements. GM’s sales fell as it tries to shift its business away from rental sales, but its stock gained 57 cents, or 1.9 per cent, to $30.01.

Auto parts supplier BorgWarner rose $1.48, or 4.6 per cent, to $34.16, and navigation device maker Garmin added 93 cents, or 2.3 per cent, to $41.44.

Hertz climbed after the company said it cut costs and improved the management of its rental fleet. The stock, which has been trading at its lowest since 2009, jumped $1.04, or 12.2 per cent, to $9.54.

Clothing, handbag and accessories maker Kate Spade gained $2.17, or 10.9 per cent, to $21.99 after it gave a strong profit forecast for 2016. Human resources software company Workday reported a smaller loss and better-than-expected sales. The stock rose $11.29, or 18.7 per cent, to $71.74.

Medical device maker Medtronic gave up $3.21, or 4.1 per cent, to $74.18 after its sales fell short of analysts’ projections.

Industrial conglomerate Honeywell said it’s giving up on its effort to buy rival United Technologies. It had offered to buy United Technologies for $108 per share, or about $90 billion, and Honeywell said its target wasn’t willing to negotiate a deal. United Technologies, which was one of the best Dow performers in February, slumped $1.57, or 1.6 per cent, to $95.05. Honeywell rebounded $4.52, or 4.5 per cent, to $105.87.

Oil prices also moved higher. U.S. crude rose 65 cents, or 1.9 per cent, to $34.40 a barrel in New York. Brent crude, the benchmark for international oils, rose 24 cents to $36.81 a barrel in London. Natural gas, which closed at a 17-year low on Monday, climbed 3 cents to $1.74 per 1,000 cubic feet.

Overseas markets rose after China’s move to support bank lending helped offset concern over a drop in manufacturing in the world’s second-largest economy. Germany’s DAX climbed 2.3 per cent and France’s CAC-40 added 1.2 per cent. Britain’s FTSE 100 rose 0.9 per cent. Hong Kong’s Hang Seng gained 1.5 per cent. Tokyo’s Nikkei 225 added 0.4 per cent.

The euro fell to $1.0868 from $1.0884 late Monday and the dollar rose to 114.05 yen from 112.82 yen.

The price of gold slipped $3.60 to $1,230.80 an ounce and silver decreased 16 cents to $14.76 an ounce. Copper gained 1 cent to $2.15 a pound.

In other energy trading, wholesale gasoline fell 2 cents to $1.31 a gallon. Heating oil rose less than 1 cent to $1.10 a gallon.

The Canadian Press

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