Stocks saw a sharp move higher on Tuesday as oil prices rebounded and traders looked ahead to the end of a holiday-shortened New Year's week.
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The Dow Jones Industrial Average was up 192 points, or 1.10% to 17720. The S&P 500 gained 21 points, or 1.06% to 2078, while the Nasdaq Composite added 66 points, or 1.33% to 5107.
All 10 S&P 500 sectors were in positive territory, as health care and technology led the way higher.
Wall Street told a different tale on Tuesday as stocks leaped after clawing back from triple-digit losses in the prior session to close slightly to the downside.
The Nasdaq biotechnology index jumped 1.71%, helping the Nasdaq Composite and the health care and biotech sectors notch substantial gains on the session.
Oil continued to be the name of the trading game as prices saw upward momentum compared to losses of more than 3% on Monday, pressuring the overall energy sector to shed about 2%. West Texas Intermediate crude prices rose 2.88% Tuesday to $37.87 a barrel, while Brent, the international benchmark, gained 3.19% to $37.79 a barrel.
Michael Block, chief strategist at Rhino Trading Partners, said in a note that absent earnings and big data this week, oil will continue to drive momentum.
“Yesterday, Saudi Aramco’s chairman had a lot to say, promising that the oil glut would ease up next year given how many U.S. shale producers are reducing production. But he was guarded on revenues, which could read as the Saudi’s are planning to keep pressure on prices to continue to squeeze other producers to death. That doesn’t strike me as very bullish,” he said.
While lower oil prices mean savings at the pump for consumers, global oversupply worries have been the main culprit behind oil’s plunge over the last year as prices have halved since las summer.
Elsewhere in commodities, metals were mostly higher, though gold slipped 0.65% to $1,077 a troy ounce. Silver gained 0.32% to $13.92 an ounce, while copper added 2.83% to $2.13 a pound.
“This morning, crude, gold, and copper are in the green…so risk is feeling a little better. I’m still not impressed,” Block said. “The one right spot I will point out is that stocks rallied back in the afternoon, and within the S&P, it was consumer discretionary and tech that led the way. So this was not just some squeeze of beaten up energy and materials.”
Still, Peter Kenny, independent market strategist, pointed out that with just three trading days left in 2015, a lot of the market swings are due to repositioning ahead of the new year.
“We head into year-end with the near-term direction of the market in limbo. That said, we can count on tax related end of the trades, portfolio window dressings, and below average trading volume. Net/net, energy dominates the narrative, impacting financials,” he explained.
Economic data came back into focus Monday as traders parsed a duo of reports including the latest reading on U.S. home prices from S&P/Case-Shiller. Prices rose 0.1% on a non-seasonally adjusted basis in October, lower than the 0.2% increase expected. From the same period a year prior, prices rose 5.5%, topping forecasts for a 5.4% increase.
Analysts at Barclays said in a note on Tuesday that home-price appreciation has moved sideways through the latter part of last year through 2015, before finally seeing some acceleration at the end of the third quarter.
“All three of the major house-price indexes show similar rates of house-price appreciation and growth rates have accelerated in all three since mid-2014,” they wrote. “We expect solid employment growth, modest wage increases, and the low level of housing supply to continue to support house prices in 2016.”
A gauge of consumer confidence from the Conference Board rose more than expected in December, rebounding from an unexpected drop in November. The gauge rose to 96.5 from an upwardly revised 92.6 the month prior. Forecasts were for a reading of 93.8.