By March 17, 2016 Read More →

Oil price hovers near $40, Dow and S&P 500 now positive for year as stocks jump

Oil price at its highest since early December

Oil price

Oil price gained 4 per cent on Thursday and is on track to close at its highest price since early December.  Statoil photo.

NEW YORK _ A midday gain for stocks Thursday on the heels of a four-week rally has turned major indexes positive for the year, wiping out their losses from a terrible start to 2016. Materials and energy companies are rising as the price of gold and silver and oiljump. Drug company stocks continue to tumble, pulling health care companies lower.

KEEPING SCORE: The Dow Jones industrial average rose 202 points, or 1.2 per cent, to 17,527 as of 2:21 p.m. Eastern time. The Standard & Poor’s 500 index gained 19 points, or 0.9 per cent, to 2,046. Down 10 per cent a little more than a month ago, the two indexes are higher for the first time all year _ though only by small amounts. Nasdaq composite rose 22 points, or 0.5 per cent, to 4,786. It’s still down 4.5 per cent in 2016.

METALS SHINE: The price of gold jumped $35.20, or 2.9 per cent, to $1,265 an ounce and silver climbed 81 cents, or 5.3 per cent, to $16.03 an ounce. That was the biggest one-day gain for silver in more than a year. Copper rose 6 cents, or 2.6 per cent, to $2.29 a pound. Gold is at its highest price in about a year, while silver and copper haven’t traded this high in about five months.

OIL PRICE: Benchmark U.S. crude gained $1.54, or 4 per cent, to $40 a barrel in New York. U.S. crude is on track to close at its highest price since early December. Brent crude, the benchmark for international oils, rose $1.01, or 2.5 per cent, to $41.34 a barrel in London.¬†Oil prices are now higher than they were at the end of 2015, but they’re still far lower they have been for most of the last decade.

ON TIME: Package delivery company FedEx rose after it reported strong holiday-season sales, helped by continued growth in online shopping. FedEx also raised its projections for the year. The stock gained $15.65, or 10.8 per cent, to $159.92.

FED FALLOUT: When the Federal Reserve decided Wednesday to leave interest rates unchanged, and suggested it will go slower in raising rates later this year, the dollar lost strength and commodity prices climbed. Commodities are priced in dollars, so a weaker dollar makes them more affordable in foreign markets and gives demand a boost. Investors also tend to buy gold when the dollar loses strength.

Mining company Newmont Mining added 48 cents, or 1.7 per cent, to $28.03. Glass container maker Owens-Illinois rose $1.20, or 8 per cent, to $16.18. Air Products and Chemicals, which sells gases for industrial, medical and other uses, gained $3.83, or 2.8 per cent, to $139.89.

THE QUOTE: Over the last few years the dollar has gotten stronger and stronger compared to other currencies as investors waited for interest rates to rise. Over the same period, metals prices have weakened. Now that the Fed is saying it will raise rates more slowly, the dollar is slipping and metals prices are rising.

“When the dollar strengthens gold tends to sell off and vice versa,” said James Butterfill, head of research and investment strategy at ETF Securities.

He added that investors aren’t sure what monetary policy makers in Europe will do, and that kind of uncertainty usually sends metals prices higher.

LINGERING SYMPTOMS: Health care stocks continued to slump as Congress scrutinized drug pricing practices in a hearing of the Senate Committee on Aging. Investors are fearful that it will get harder for drug companies to raise their prices and boost their profits and revenues. Endo International, which is down more than 50 per cent this year, lost $4.42, or 13 per cent, to $29.49 and Eli Lilly gave up $3.45, or 4.8 per cent, to $69.03. The Nasdaq biotech index has dropped 6 per cent this week, and the broader S&P 500 health care index is down 3.5 per cent.

BURNED: Williams-Sonoma lost $3.31, or 5.6 per cent, to $56.15 after the seller of cookware and home furnishings disclosed disappointing fourth-quarter results and gave a disappointing outlook for 2016.

BROKEN CIRCUIT: Electronics manufacturer Jabil Circuit lost $2.22, or 10.1 per cent, to $19.74 after it posted weaker-than-expected results in the fourth quarter and its guidance was also beneath expectations.

SEAWORLD CRUISES: SeaWorld Entertainment said it will immediately stop breeding orcas after years of controversy over keeping the whales in captivity. The move will phase the animals out of its theme parks. The stock gained $1.11, or 6.5 per cent, to $18.23.

ART CLASS: Arts and crafts store operator Michaels Cos. jumped after its fourth-quarter profit and sales topped estimates. The stock advanced $2.41, or 9.9 per cent, to $26.73.

NOT SO SWEET: Mondelez International fell 95 cents, or 2.3 per cent, to $40.77 after Pershing Square, the hedge fund run by investor Bill Ackman, said it sold 20 million shares. Pershing Square remains a major shareholder in Mondelez, which makes products including Oreo cookies, Cadbury chocolates and Trident gum.

UNEMPLOYMENT BENEFITS RISE: The Labor Department reported that applications for unemployment benefits rose slightly last week, but they remain at levels consistent with a healthy job market.

BONDS, CURRENCIES: Bond prices have also risen, dampening their yields. The yield on the 10-year Treasury note slipped to 1.90 per cent after it fell to 1.91 per cent on Wednesday. The euro rose to $1.1323 from $1.1204. The dollar fell to 111.35 yen from 112.68 yen.

OVERSEAS: German’s DAX gave up 0.9 per cent and the CAC-40 in France lost 0.5 per cent. Britain’s FTSE 100 inched up 0.4 per cent. Japan’s Nikkei 225 index closed 0.2 per cent lower as the dollar fell. A weaker dollar would be bad news for Japanese exporters. Elsewhere, Hong Kong’s Hang Seng index climbed 1.2 per cent. Shanghai’s composite index came back from early losses, gaining 1.2 per cent. South Korea’s KOSPI added 0.7 per cent.

The Canadian Press.

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