Stocks Close Modestly Higher Amid Jump In Oil Prices - U.S. Commentary

(RTTNews) - With a jump in oil prices leading to a rally in the energy sector, stocks managed to end Wednesday's trading modestly higher. The uptick helped the major averages continue to regain ground after ending Monday's trading at their lowest closing levels in a month.

The major averages ended the day in positive territory but well off their best levels of the day. The Dow rose 40.68 points or 0.2 percent to 18,202.62, the Nasdaq inched up 2.57 points or 0.1 percent to 5,246.41 and the S&P 500 edged up 4.69 points or 0.2 percent to 2,144.29.

The modest strength on Wall Street came amid a sharp increase by the price of crude oil, with crude for November delivery surging up $1.31 to $51.60 a barrel, the closing level since July of 2015.

The jump by the price of oil came following the release of a report showing an unexpected drop in weekly crude oil inventories.

The report from the Energy Information Administration said crude oil inventories slumped by 5.2 million barrels last week compared to expectations for an increase of about 2.7 million barrels.

Meanwhile, a notable decline by shares of Intel (INTC) limited the upside for the tech-heavy Nasdaq, with the semiconductor giant tumbling by 5.9 percent.

The drop by Intel came after the company reported better than expected third quarter results but forecast fourth quarter revenues below analyst estimates.

In U.S. economic news, the Commerce Department released a report before the start of trading showing that housing starts unexpectedly tumbled to their lowest level in well over a year in September.

The Federal Reserve also released its Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts.

The Beige Book said economic activity continued to expand during the reporting period from late August to early October, with most districts indicating a modest or moderate pace of expansion.

Sector News

Among energy stocks, oil service stocks showed a particularly strong move to the upside, resulting in a 2.6 percent jump by the Philadelphia Oil Service Index.

Halliburton (HAL) posted a standout gain within the oil service sector after reporting an unexpected third quarter profit.

Gold stocks also saw significant strength on the day, with the NYSE Arca Gold Bugs Index surging up by 2.8 percent. The strength in the sector came as gold for December delivery climbed $7 to $1,269.90 an ounce.

Considerable strength was also visible among steel stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Steel Index. The gain lifted the index to a two-month closing high.

Airline, banking, and networking stocks also saw notable strength on the day, while some weakness emerged among biotechnology stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Australia's All Ordinaries Index climbed by 0.5 percent. However, Hong Kong's Hang Seng Index bucked the uptrend and fell by 0.4 percent.

Meanwhile, the major European markets moved to the upside on the day after seeing initial weakness. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both rose by 0.3 percent.

In the bond market, treasuries showed a lack of direction throughout the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 1.752 percent.

Looking Ahead

Trading on Thursday may be impacted by some key economic data, including reports on weekly jobless claims, existing home sales, and Philadelphia-area manufacturing activity.

On the earnings front, American Express (AXP), eBay (EBAY), and Mattel (MAT) are among the companies releasing their quarterly results after the close of today's trading.

American Airlines (AAL), Travelers (TRV), Union Pacific (UNP), and Verizon (VZ) are also due to report their results before the start of trading on Thursday.