By Joseph Adinolfi and Carla Mozee, MarketWatch
Rising oil prices and fading Brexit fears help boost stocks
The Dow Jones Industrial Average climbed more than 200 points
Wednesday as a rally in crude-oil prices and a retrenchment in
Brexit fears put stocks on track to log a second straight day of
sharp gains.
A U.S. Energy Information Administration report showing a sharp
drop in domestic crude supplies
(http://www.marketwatch.com/story/oil-gains-more-ground-after-eia-reports-41-million-barrel-fall-in-us-crude-supplies-2016-06-29)
sent oil prices soaring, which carried energy and materials shares
higher.
Inventories have been falling for months, but so far the U.S.
hasn't seen a corresponding rise in active oil rigs, which bodes
well for the price of oil--and by extension, energy and materials
stocks.
"We could see supplies continue to draw down and oil remain
relatively high compared with its recent price," said Paul Nolte,
portfolio manager at Kingsview Asset Management.
Investors will be watching the Baker Hughes Inc.'s(BHI) weekly
rig-count data for more clues about this trend, Nolte said.
The Dow climbed 214 points, or 1.2%, to 17,622, as nearly all 30
of the blue-chip gauges components trading in positive territory,
led by a 2.5% gain in Chevron Corp. The S&P 500 rose 26 points,
or 1.3%, to 2,062, with all 10 of its sectors trading higher, led
by a sharp 2.1% jump in energy shares and a 1.5% rise in
materials.
Meanwhile, the tech-heavy Nasdaq Composite Index jumped 72 points, or 1.5%, to 4,763.
U.S. equities followed Asian and European stock markets
higher.
Investors have shown that they are willing to wait for more
clarity about the timeline and details of the U.K.'s exit from the
EU, dubbed Brexit. Meanwhile, they are shifting their attention
back to monetary policy, corporate earnings and the U.S. economic
outlook, said Jack Ablin, chief investment officer at BMO Private
Bank.
"The next time we come face to face with Brexit could be in the
second-quarter earnings results if we hear management wringing
their hands about the strong dollar," Ablin said.
Though the Fed has stayed mum about how the Brexit vote might
affect its outlook, investors now expect it will stay on hold for
the rest of the year. The Fed-funds futures market, where traders
place bets on the timing of future rate increases, is pricing in a
higher probability of a rate cut this year than a hike, according
to the CME Group's FedWatch tool.
With global bond yields expected to remain lower for longer,
dividend-paying utilities, technology and consumer-staples shares
are looking increasingly attractive, Nolte said.
"Now that the dust has settled, people are looking around and
saying 'well, rates will stay low, so I can go back to buying
dividend paying stocks," Nolte said.
The U.K. has yet to trigger Article 50 of the Lisbon Treaty,
which would initiate the process of withdrawing from the EU.
Leaders in Brussels are pushing for a quick start to the exit
process, but British Prime Minister David Cameron, who announced
his impending resignation after the vote, has said he would leave
that task to his successor.
Read:Brexit's Article 50: How 250 words could chart Britain's
future
(http://www.marketwatch.com/story/brexits-article-50-how-250-words-could-chart-britains-future-2016-06-25)
Also:After Brexit, will Britain change course and 'Breturn' to
the EU?
(http://www.marketwatch.com/story/after-brexit-get-ready-for-a-breturn-as-britain-reverses-course-2016-06-28)
Also read: 5 ways to stop Brexit from happening
(http://www.marketwatch.com/story/5-ways-to-stop-brexit-from-happening-2016-06-27)
On Tuesday
(http://www.marketwatch.com/story/dow-futures-rally-200-points-as-us-stocks-get-set-to-rebound-2016-06-28),
the Dow jumped 269.48 points, or 1.6%, to 17,409.72. It lost 900
points in the two sessions after the Brexit vote. The S&P 500
picked up 1.8%, while the Nasdaq Composite closed up 2.1%.
Economic data: Consumer spending increased for a second month in
May, though at a slower pace than the prior month.
Core prices rose at an annualized rate of 1.6% in May, according
to the PCE price index, the Fed's preferred gauge of inflation.
Pending home sales slid 3.7% in May, a step back after several
months of strong sales gains. Stocks edged lower after the data but
have since climbed to session highs. .
Movers and Shakers: Worthington Industries(WOR) shares rallied
1.8% after reporting stronger quarterly earnings than expected.
General Mills Inc.(GIS) climbed 2.5% after posting fiscal
fourth-quarter adjusted earnings and revenue
(http://www.marketwatch.com/story/general-mills-shares-rise-after-dividend-increase-earnings-beat-2016-06-29)
that topped Wall Street's expectations. The maker of Cheerios
cereal, Yoplait yogurt and other foods raised its quarterly
dividend as well as its target for cost savings.
General Electric Co.(GE) rose 1.8% after the U.S. government
rescinded its designation
(http://www.marketwatch.com/story/ge-capital-no-longer-systemically-important-institution-government-rules-2016-06-29)
of GE Capital as a systemically important nonbank financial
institution.
Monsanto Co. (MON) shares traded 1.5% higher despite the company
reporting sales for its fiscal third quarter that fell short of
expectations
(http://www.marketwatch.com/story/monsanto-misses-profit-and-sales-expectations-shares-drop-2016-06-29).
Separately, EU antitrust regulators signaled they will conduct a
strict review
(http://www.marketwatch.com/story/eu-to-open-review-of-bayer-monsanto-merger-2016-06-29-6485346)
of Bayer AG's (BAYN.XE) pending $62 billion merger with
Monsanto.
PrivateBancorp Inc.'s shares (PVTB) gained 22% after Canadian
Imperial Bank of Commerce (CM.T) said it's agreed to buy the
Chicago-based lender
(http://www.marketwatch.com/story/cibc-agrees-to-purchase-privatebancorp-for-38-billion-2016-06-29)for
about $3.8 billion in cash and stock.
Tesaro Inc.(TSRO) share price doubled after the biotech
company's late-stage trials of an ovarian cancer treatment met
primary endpoints
(http://www.marketwatch.com/story/tesaros-stock-nearly-doubles-toward-record-open-after-successful-cancer-treatment-trial-2016-06-29).
Shire PLC(SHPG) (SHPG) shares climbed 4.2% after the drugmaker
said a trial of its treatment
(http://www.marketwatch.com/story/shires-stock-surges-after-adhd-drug-trial-meets-key-endpoints-2016-06-29)for
attention-deficit/hyperactivity disorder, or ADHD, met its primary
goals.
Nike Inc.(NKE) shares gained 1.6% after the company reported
quarterly profit fell 2%
(http://www.marketwatch.com/story/nike-struggles-in-north-america-as-rivals-score-2016-06-28)
late Tuesday. Following the report, shares tumbled in after hours
trade.
Autoliv Inc.(ALV) was down nearly 8% after the maker of seat
belts and air bags said it's cooperating with Toyota Motor Corp.'s
(7203.TO) (7203.TO) recall of 1.4 million vehicles.
Southwestern Energy Co.(SWN) fell 5.9% after the oil-and-gas
producer proposed a stock offering
(http://www.marketwatch.com/story/southwestern-energys-stock-falls-after-launching-share-offering-2016-06-29).
Terms of Wal-Mart Stores Inc.'s(WMT) recent deal to buy a 5%
stake in JD.com Inc.(JD) could spur Wal-Mart to increase its
investment in the Chinese e-commerce company, The Wall Street
Journal reported
(http://www.wsj.com/articles/wal-mart-deal-with-jd-com-includes-incentives-for-retailer-to-raise-stake-1467191406?mod=wsj_nview_latest).
AeroVironment Inc. shares (AVAV) fell 4.7% after the drone maker
posted a decline in quarterly revenue and issued a financial
outlook that largely fell short of expectations
(http://www.marketwatch.com/story/aerovironment-drone-sales-lose-altitude-2016-06-28).
Other markets: Gold futures were up 0.5% at $1,324 an ounce. The
ICE U.S. Dollar Index was down 0.6% at 95.6200.
(END) Dow Jones Newswires
June 29, 2016 11:35 ET (15:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.