NOI Natl Oilwell

By Riva Gold and Aaron Kuriloff 

The S&P 500 approached a record high Tuesday, lifted by gains in energy shares and renewed confidence that the Federal Reserve won't disrupt equities markets.

The Dow industrials touched 18000 Tuesday for the first time in more than a month, as the S&P 500 neared its record of 2130.82.

Rising energy stocks have helped lift the major indexes in recent weeks as oil prices climbed back around $50 a barrel. Investors' belief that the Fed will take a cautious approach to raising rates also boosted the rally.

Oil prices extended gains Tuesday as the dollar weakened and global outages curbed supply. U.S. crude rose 0.9% to $50.11 a barrel after settling at its highest level since July on Monday.

The Dow Jones Industrial Average gained 78 points, or 0.4%, to 17998. The S&P 500 climbed 0.4% and the Nasdaq Composite Index added 0.2%.

Energy shares in the S&P 500 added 2.1% as Newfield Exploration climbed 5.1% and Marathon Oil gained 4.4%. Chevron and Exxon Mobil were among the biggest gainers in the Dow industrials.

Energy shares in the S&P 500 have rallied more than 10% in the past three months, while the materials sector has gained over 9%.

"Oil has continued to strengthen, giving people comfort that at some point we can see a recovery in S&P 500 earnings," said Doug Foreman, chief investment officer at Kayne Anderson Rudnick Investment Management.

"Areas like energy, industrial materials and a lot of commodities -- which had been decimated -- are coming out of a depression, and that change alone is very, very positive for the overall marketplace," he said.

U.S. government bond yields fell as concerns about rising rates faded. The yield on the benchmark 10-year Treasury note was 1.716%, according to Tradeweb, compared with 1.723% Monday. Yields fall as bond prices rise.

The 10-year German Bund touched a record low of 0.048%.

Many investors drew reassurance from a speech by U.S. Federal Reserve Chairwoman Janet Yellen on Monday, in which she said Fed officials expect the economy to improve but won't raise interest rates until new uncertainties about the economic outlook are resolved.

"We think they're going to move very, very slowly," said Monica Defend, head of global asset allocation research at Pioneer Investments.

Friday's weaker-than-expected jobs report sharply reduced expectations for a rate rise at the Fed's June and July meetings. Market participants currently price just a 4% chance of a rate rise in June and a 25% chance of a rise by July, according to Fed-fund futures tracked by CME Group.

"Every data point is really being dissected," said Chris Dyer, director of global equity at Eaton Vance. "Consumer strength has been a real engine of growth in the U.S. economy, and this [jobs report] raises a little bit of a red flag," he said.

The WSJ Dollar Index, which measures the buck against a basket of 16 currencies, fell 0.3%.

Health care stocks were the only decliners in the S&P 500, falling 0.4%. Shares of Valeant Pharmaceuticals International fell 15% after the company lowered its forecast for financial performance. The Nasdaq Biotechnology Index lost 2.1%.

The Stoxx Europe 600 rose 1.1%, led by energy companies, following an upbeat session in Asia.

Asian shares mostly closed higher, boosted by the recent rally in commodities and a strong finish on Wall Street. Japan's Nikkei Stock Average added 0.6%, while Hong Kong's Hang Seng Index gained 1.4%.

In other currencies, the euro edged down less than 0.1% against the dollar to $1.1353, while the dollar lost 0.1% against the yen to Yen107.3850.

The British pound recovered 0.7% against the dollar to $1.4555 after new polls suggested support for the U.K. to remain in the European Union in a June 23 referendum.

-- Akane Otani contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Aaron Kuriloff at aaron.kuriloff@wsj.com

(END) Dow Jones Newswires

June 07, 2016 14:05 ET (18:05 GMT)

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