Stocks Climb Back, Oil Prices Shed Gains

U.S. equity markets finished the day strong with the help of healthcare and energy stocks, shrugging off a rough day in oil.

The Dow Jones Industrial Average jumped 122 points, or 0.73% to 16912. The S&P 500 added 15 points, or 0.8% to 1995, while the Nasdaq Composite gained 42 points, or 0.9% to 4791.

After falling into negative territory, the energy sector again turned positive on the session, rising more than 1%. Telecom and utilities were the only two laggards. Healthcare was the biggest mover to the upside.

Today’s Markets

While a rally in the energy sector helped send Wall Street higher in the previous session, gains there on Wednesday were subdued after data from the Energy Information Administration. Weekly inventories figures showed a bigger-than-expected increase in U.S. crude oil supplies. Stockpiles rose by 3.07 million barrels, compared to a 2.2 million barrel expected build.

Oil prices, which had rallied more than 2% ahead of the EIA data’s release, reversed course as traders digested the news and weighed it against expectations global production could begin falling more sharply. That would help push prices back up after a significant decline over the last year and a half.

U.S. crude settled 1.4% lower to $47.81 a barrel, while Brent, the international benchmark, fell 1% to $51.95 a barrel. On Tuesday, U.S. oil futures settled at their highest level since Aug. 31.

Elsewhere in the commodities complex, metals ended higher as gold rose 0.2% to $1,148 a troy ounce, while silver jumped 0.6% to $16.09 an ounce. Copper, meanwhile, inched higher to $2.37 a pound.

Technology shares also weighed on the major averages as Adobe (NYSE:ADBE), which shed 5.3%, was the biggest decliner in the sector. After the closing bell on Tuesday, the company unexpectedly revised down its full-year outlook, sending shares plunging. The company joined Electronic Arts (NYSE:EA), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Google (NASDAQ:GOOGL) in decline.

Meanwhile, traders also focused on the looming 3Q earnings season after disappointing results from Yum Brands (NYSE:YUM), which sent those shares down as much as 20%, the biggest decline in 13 years.

Larry Shover, chief investment officer at Solutions Funds Group, said there are two keys to sustaining the recent rally in the equity markets: Decent economic data out of China, and solid corporate earnings.

China markets have been closed for a week due to the Golden Holiday, however there’s been a rebound in China, emerging markets, and commodities so far this month and Shover said the upward trend will continue if China’s September data pace is sustained.

“For earnings, the headlines were more mixed – Yum and NuSkin were definitely ‘bad’ but the Adobe guide cut had more to do with FX and its subscription transition (vs. poor demand),” Shover said. “It is still way too early in the Q3 season to draw any firm conclusions.”

Earnings continued to trickle out ahead of the opening bell in the U.S. Constellation Brands (NYSE:STZ) saw a better-than-forecast profit thanks to higher sales of its Corona and Modelo brands. The company also raised its full-year profit outlook, which helped send shares higher.

Monsanto (NYSE:MON) saw a bigger-than-expected quarterly loss thanks to weakness in the commodity market. However, the world’s largest seed and agrichemical company set expectations that its results will be pressured well into next year.

Overnight, Samsung said it expects to see a jump in its quarterly profit – an 80% increase from the year prior to $6.3 billion. The news sent the company’s shares surging.

With no economic data on tap, investors focused on global M&A as markets rallied overseas. British-South African brewing company SAB Miller quickly dismissed a revised takeover bid from  Belgium-based Anheuser-Busch InBev (NYSE:BUD). The proposed $104 billion deal, a 44% premium to SABMiller’s September 14 closing price, “very substantially undervalues,” the company said.

European equity markets capped the session mixed amid volatility in U.S. markets. The Euro Stoxx 50, which tracks large-cap companies in the eurozone, fell 0.08%. The German Dax climbed 0.54%, while the French CAC 40 declined 0.11%, and the UK’s FTSE 100 fell 0.08%.

The Fed might have been out of the market’s sight, but not out of mind on Wednesday. Investors awaited the central bank’s September FOMC minutes, set for release Thursday afternoon. The meeting minutes will give Wall Street a clearer picture of what voting members debated before they decided to hold off on hiking short-term interest rates from historic lows at the meeting.

In recent action, the yield on the 10-year U.S. Treasury bond rose 0.027 percentage point to 2.06%.