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Dow Industrials Top 18000 for First Time Since July
| Wall Street Journal | - |
U.S.
stocks rose Monday, propelling the Dow Jones Industrial Average above
18000 for the first time since July. The blue-chip index has gained
nearly 15% since mid-February, as early-year fears about the U.S.
Dow Industrials Top 18000 for First Time Since July
Energy stocks rise the most in the S&P 500, erasing earlier losses
The blue-chip index has gained nearly 15% since mid-February, as early-year fears about the U.S. economy faded, oil prices rebounded and the Federal Reserve signaled a cautious approach to raising rates. With Monday’s advance, the Dow is up 3.3% for the year.
“You can’t underestimate people’s fear of missing out” in the stock market, said Steve Sosnick, an options trader at Timber Hill, the market-making division of Interactive Brokers. “The market came roaring back, and it’s one big momentum machine,” he added.
Even as stocks have posted strong gains, the rally has slowed. Global growth remains sluggish, energy prices remain near depressed levels and company earnings aren’t particularly encouraging. The Dow industrials climbed roughly 12% from their Feb. 11 lows by mid-March. Since then, the blue-chip index has risen about 3%.
“The more highs we get, the more antsy people are,” said Justin Wiggs, managing director in equity trading at Stifel Nicolaus.
On Monday, the Dow Jones Industrial Average rose 107 points, or 0.6%, to 18004, closing above 18000 for the first time since July 20. The S&P 500 added 0.7% and the Nasdaq Composite gained 0.4%.
The broad move higher in U.S. stocks—all of the S&P 500’s sectors rose —marked a reversal from early losses. A tumble in oil prices sparked the initial losses after major oil-producing countries failed to reach an agreement to freeze output.
The turnaround “shows us the market is able to shrug off bad information more easily,” said Jonathan Corpina, senior managing director at Meridian Equity Partners.
Energy stocks rose the most in the S&P 500, gaining 1.6%. Consumer stocks rose after a batch of encouraging quarterly results.
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Oil prices had rallied in recent weeks on speculation that Saudi Arabia might lead an agreement between members of the Organization of the Petroleum Exporting Countries and Russia to freeze production at a meeting last weekend. But the talks in Doha collapsed after Saudi Arabia reasserted a demand that Iran also agree to cap production.
“It seems like oil-producing countries have a hard time coordinating on anything at the moment,” said Lars Tranberg, analyst at Danske Capital. “But I only see this as a major negative for stock markets if oil prices decline back to January levels,” he said.
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Traders work on the floor of the New York Stock Exchange.
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Bloomberg News
Some investors said a deal would have done little to curb the global supply glut, given the freeze would have been at record-high levels. “Any deal struck will not materially impact the global supply-demand balance” during the first half of 2016, the International Energy Agency said last week.
Meanwhile, a rise in U.S. inventories has reduced OPEC’s ability to be the swing producer, said Jodie Gunzberg, head of commodities and real assets at S&P Dow Jones Indices.
Recent declines in production from the U.S. and other non-OPEC producers have supported the oil price, analysts said. An oil worker strike in Kuwait also added support to prices as industrial action cut the country’s oil production in half.
U.S. government bonds fell. The yield on the 10-year Treasury note rose to 1.773% from 1.753% on Friday.
The Stoxx Europe 600 advanced 0.4%.
Earlier, stocks in Australia, Shanghai and Hong Kong all ended lower, dragged down by losses in energy shares.
Japan’s Nikkei Stock Average fell 3.4% in the wake of recent earthquakes and as the yen hovered near a fresh 18-month high against the dollar, weighing on shares of exporters.
In recent action, the dollar added 0.1% against the yen to ¥108.90.
In other markets, gold futures slipped 0.1% to $1,233 an ounce.
—Georgi Kantchev and Saumya Vaishampayan contributed to this article.
Write to Riva Gold at riva.gold@wsj.com