Stocks advance as traders keep an eye on oil
Stocks traded higher Monday, attempting to bounce from a sharp sell-off last week, as investors eyed low oil prices in a shortened trading week.
The Dow traded higher and tried to hold gains of less than 100 points. Boeing and Goldman Sachs contributed the most to gains.
The Dow transports traded more than half a percent higher with airlines leading advancers.
Financials and information technology jumped about 1 percent to lead advancers in the S&P 500, while energy was the only laggard as oil continued to decline.
“This time of the year is notorious for rallying. You might get some squaring of positions here that has little to do with oil prices,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “With slippage again in oil prices, investors are looking through that a little bit and not taking it as a sign of global economic (weakness). … It may be a one-day wonder.”
Both the S&P and Dow are still negative year to date.
Brent hit $36.05 a barrel in early morning trade, its lowest since July 2004, and continued to trade more than 50 cents lower near that level.
WTI crude futures for January delivery hit a new near-seven-year low. However, the contract expires Monday. The February contract did not touch fresh lows, and traded about 44 cents lower near $35.62 a barrel just before the U.S. market open.
“To me this just has to do with end of the year. Normal seasonal bounce. We’ll see if it can last,” said Adam Sarhan, CEO of Sarhan Capital.
“The market’s oversold. It’s overdue for a bounce. I think it’s more of a rotation going on underneath the surface because leadership is very narrow,” he said.
Analysts also noted some support from the weaker U.S. dollar, which traded mildly lower against major world currencies, with the euro just below $1.09.
The U.S. stock market closes early Thursday, Christmas Eve, and is shut on Friday for Christmas Day.
The only major data out Monday was the Chicago Fed National Activity Index, which declined to minus 0.30 in November from minus 0.17 in October.
Treasury yields traded mixed, with the 2-year yield higher near 0.96 percent and the 10-year yield lower near 2.19 percent.
“Even though the (Federal Reserve) did move off the zero bound, it did so in light of an economy that shows little signs of accelerating,” Luschini said.
“On balance the Fed is unwilling to be as aggressive despite what their own dot plot would suggest,” he said.
U.S. stocks closed sharply lower Friday as investors weighed low oil and economic data in the aftermath of the Federal Reserve’s rate hike Wednesday. Options expiration also contributed to volatility.
With Friday’s late afternoon decline in stocks, the major U.S. averages wiped out gains for the week. Trade volume Friday was the second-highest of the year.
About 10 stocks advanced for every three decliners on the New York Stock Exchange, with an exchange volume of 71 million and a composite volume of 189 million.
Crude oil futures for January delivery traded down 66 cents at $34.07 a barrel. The February contract traded down 65 cents at $35.42 a barrel.
Gold futures for February delivery rose $10.00 to $1,075.00 an ounce as of 9:41 a.m., ET.