Stocks Rise Despite Slide in Oil Prices
U.S. and European stocks turned higher Monday, shaking off a decline in oil prices after major oil-producing countries failed to reach an agreement to freeze output.
Oil prices had rallied in recent weeks on speculation that Saudi Arabia might lead an agreement between members of the Organization of the Petroleum Exporting Countries and Russia to freeze production at a meeting last weekend. But the talks in Doha collapsed after Saudi Arabia reasserted a demand that Iran also agree to cap production.
While some energy stocks followed oil prices lower, including shares of Chesapeake Energy and Transocean, the broader energy sector and stock market advanced.
The Dow Jones Industrial Average added 51 points, or 0.3%, to 17948. The S&P 500 rose 0.2% and the Nasdaq Composite inched up 0.1%.
The Stoxx Europe 600 advanced 0.2%.
"It seems like oil-producing countries have a hard time coordinating on anything at the moment," said Lars Tranberg, analyst at Danske Capital. "But I only see this as a major negative for stock markets if oil prices decline back to January levels," he said.
Several corporate updates buoyed major indexes.
Walt Disney shares rose 2.1% after a new version of "The Jungle Book" opened this weekend and topped the box office with strong sales.
Morgan Stanley's profit fell 53% in the first quarter, the bank said Monday, but earnings still beat estimates. Shares rose 0.8%.
Back in the energy sector, Brent crude, the global oil benchmark, fell 2.7% to $41.96 a barrel after falling to as low as $40.10 earlier in the session. U.S. crude oil declined 3.2% to $39.07 a barrel.
Brent crude remains sharply higher from a low of $27.88 hit in January, when oil's sharp falls sparked concerns about the energy sector, its lenders, and energy-dependent economies.
While oil prices fell Monday, some investors said a deal would have done little to curb the global supply glut, given the freeze would have been at record-high levels. "Any deal struck will not materially impact the global supply-demand balance" during the first half of 2016, the International Energy Agency said last week.
Meanwhile, a rise in U.S. inventories has reduced OPEC's ability to be the swing producer, said Jodie Gunzberg, head of commodities and real assets at S&P Dow Jones Indices.
Recent declines in production from the U.S. and other non-OPEC producers have supported the oil price, analysts said. An oil worker strike in Kuwait also added support to prices as industrial action cut the country's oil production in half.
Earlier, stocks in Australia, Shanghai and Hong Kong all ended lower, dragged down by losses in energy shares.
Japan's Nikkei Stock Average fell 3.4% in the wake of recent earthquakes and as the yen hovered near a fresh 18-month high against the dollar, weighing on shares of exporters.
In recent action, the dollar added 0.1% against the yen to Yen108.86.
Currencies of commodity-dependent economies fell, with the Canadian dollar slipping 0.3% against the U.S. dollar.
In other markets, the U.S. 10-year Treasury note yield rose to 1.778% from 1.753% on Friday. Yields rise as prices fall. Gold was nearly flat at $1,235 an ounce.