By February 22, 2016 Read More →

Oil prices surge, pushing energy and materials stocks higher

Oil prices up Monday morning

oil prices

Last Friday, after a weeklong rally, oil prices fell.  On Monday morning the price of oil recovered, lifting energy stocks as well.  Repsol photo.

NEW YORK _ Stocks are jumping Monday as the price of oil surges, lifting energy stocks as well as mining and chemicals companies. The stock market is coming off its best week of the year and has recovered its losses from earlier in the month.

KEEPING SCORE: The Dow Jones industrial average jumped 266 points, or 1.6 per cent, to 16,658 as of 1:50 p.m. Eastern time. The Standard & Poor’s 500 index rose 29 points, or 1.5 per cent, to 1,946. The Nasdaq composite advanced 71 points, or 1.6 per cent, to 4,575. The Dow and S&P 500 are still down more than 4 per cent this year.

ENERGY: Benchmark U.S. crude climbed $2.11, or 7.1 per cent, to $31.75 a barrel in New York. Brent crude, which is used to price international oils, rose $1.70, or 5.1 per cent, to $34.71 a barrel in London. The price of wholesale gasoline increased almost 6 per cent and heating oil rose 3 per cent.

Chevron gained $2.88, or 3.3 per cent, to $89.38 and Marathon Oil added 62 cents, or 9.2 per cent, to $7.35.

U.S. oil prices have risen about 20 per cent since Feb. 11. Still, oil prices have dropped 70 per cent since the middle of 2014 as global stockpiles have built up and up. The International Energy Agency said Monday that it doesn’t expect oil prices to recover significantly until 2017.

MATERIALS STOCKS: Chemicals and mining companies also rose as investors interpreted the increased price of oil as a sign the global economy is solid. Alcoa rose 99 cents, or 12.5 per cent, to $8.86, putting the stock on pace for its biggest one-day gain in almost seven years. Freeport-McMoran added 90 cents, or 13 per cent, to $7.82. Freeport-McMoran, a copper producer and oil company, has nearly doubled in value since mid-January. Dow Chemical rose 97 cents, or 2 per cent, to $48.05.

AMAZON STRONG: Consumer stocks made large gains. The biggest went to e-commerce company Amazon, which said Monday that shoppers who are not members of its Prime loyalty program will have to make larger orders to get free shipping. The move could push more shoppers to sign up for a $99-a-year Prime membership. Its stock climbed $22.70, or 4.2 per cent, to $557.60.

Starbucks, too, rose after making changes to its customer rewards program. The coffee chain said shoppers who spend less money won’t get as many freebies. Its stock added $1.10, or 1.9 per cent, to $58.77.

Automakers rose, as Ford added 35 cents, or 2.9 per cent, to $12.45 and General Motors picked up 61 cents, or 2.1 per cent, to $29.39.

TIMBER: Lumber Liquidators plunged $2.33, or 16.4 per cent, to $11.88 after the U.S. government said people exposed to some types of its laminate flooring were three times as likely to get cancer as it had originally predicted. The Centers for Disease Control and Prevention now says the risk of cancer is six to 30 cases per 100,000 people. It previously estimated two to nine cases per 100,000 people.

Lumber Liquidators has plunged 80 per cent over the last year after CBS’s news show “60 Minutes” reported that those floors contain high levels of the carcinogen formaldehyde.

EUROPE: European stocks rose as investors hoped for more steps to stimulate the European Union economy. This week, finance ministers from the Group of 20 major rich and developing economies will meet, and they could take new steps to shore up global growth.

Germany’s DAX gained 2 per cent and France’s CAC-40 added 1.8 per cent. Britain’s FTSE 100 rose 1.5 per cent.

THEY GO TOGETHER: “Stock market prices and oil prices have been tracking each other like a shadow through the first part of the year,” said Michael Scanlon, managing director and portfolio manager for John Hancock Asset Management.

Scanlon said that usually doesn’t happen for long stretches. He said the market is rising and falling with oil prices because when prices go down, investors get tend to get concerned about the health of the global economy, and when oil prices rise, they are reassured.

DATA CENTER DEAL: Data centre operator Equinix will buy European competitor TelecityGroup for $3.3 billion. Equinix has more than 100 data centres in 15 countries, and will gain TelecityGroup’s 39 facilities in 11 European countries. Equinix stock added $4.05, or 1.4 per cent, to $303.42.

EAT UP: Food service company Sysco Corp. said it will buy Europe’s Brakes Group for $3.1 billion. Last year Sysco gave up on an effort to buy U.S. Foods for $3.35 billion after the Federal Trade Commission opposed the deal. Sysco gave up $2.91, or 6.5 per cent, to $42.08.

INSURERS RISE: Health insurers UnitedHealth and Humana climbed after the government released a policy update for a key type of plan. According to analysts, the Centers for Medicare and Medicaid Services will raise Medicare Advantage plan rates by about 3.5 per cent.

Medicare Advantage plans are privately-run versions of the government’s Medicare program for people who are over 65 or disabled. They offer basic Medicare coverage along with extras like vision or dental coverage or lower premiums.

UnitedHealth stock gained $3.36, or 2.9 per cent, to $121.04 and Humana gained $4.95, or 3 per cent, to $170.29.

HEALTHY QUARTER: Botox maker Allergan climbed after its quarterly results surpassed Wall Street projections. The stock rose $7.26, or 2.6 per cent, to $283.01.

BRITAIN: The pound fell 1.7 per cent as London Mayor Boris Johnson said he believes Britain should leave the European Union. Prime Minister David Cameron wants to keep the country within the 28-nation bloc, and voters will hold a referendum in June.

Analysts say the “stay” campaign is still likely to win, but the prospect of prolonged uncertainty is unnerving some investors.

The pound fell to $1.415 from $1.441 on Friday.

CURRENCY: Bond prices slipped, and the yield on the 10-year Treasury note rose to 1.77 per cent from 1.75 per cent. The euro fell to $1.1016 from $1.1135 late Friday and the dollar rose to 113.09 yen from 112.56 yen.

METALS: Precious and industrial metals futures ended mixed. Gold fell $20.70 to $1,210.10 an ounce, silver lost 19 cents to $15.18 an ounce and copper rose four cents to $2.12 a pound.

The Canadian Press

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