U.S. equity markets jumped on Tuesday thanks to a rally in technology shares.
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The Dow Jones Industrial Average was 221 points higher, or 1.39% to 16195. The S&P 500 gained 30 points, or 1.66% to 1895, while the Nasdaq Composite gained 97 points, or 2.25% to 4434.
Technology and consumer discretionary led all 10 S&P 500 sectors into positive territory.
Wall Street extended a rally from Friday as traders returned from the President's Day holiday to a slew of headlines driving upward momentum.
Big-cap technology names led the Nasdaq Composite higher on Tuesday. Amazon (NASDAQ:AMZN) was one of the biggest point gainers on the index, jumping 2.7% on the session after the company announced the acquisition of an Indian payments processor, and said its Prime Now service in San Diego would add restaurant delivery.
Shares of Google (NASDAQ:GOOGL), Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL), Yahoo (NASDAQ:YHOO), and a jump up in the Nasdaq Biotechnology Index also contributed to momentum.
Elsewhere, after a closed-door meeting, Saudi Arabia, Venezuela, Russia, and Qatar said they agreed to cap oil production at January levels. The move is seen as likely to ease the swift downward pace of oil prices, but it wasn't enough to quell global market concerns about worldwide oversupply. However, the deal was contingent on other oil producers joining the pledge.
Still, the two global oil benchmarks bounced between gains and losses through the session on the heels of the announcement.
West Texas Intermediate crude dropped 1.36% to settle at $29.04 a barrel, while Brent, the international benchmark, sank 3.62% to $32.18.
Investors have been anxiously awaiting word from the Organization of the Petroleum Exporting Countries that member nations would agree to curb output in order to help prices recover from nearly 12-year lows. Since peaking in the summer of 2008, global oil prices have dropped more than 75%.
"Quite frankly, a production cut was never going to happen, with the recent Saudi-Iran dispute meaning it would be political suicide for either to concede market share. We have never heard anything to indicate that either Iran or Saudi [Arabia] are even considering any reduction in production, and perhaps today’s fall in oil prices reflects the realization of this fact," Joshua Mahony, IG market analyst, said in a note.
Analysts at Barclays said while the move by the four nations is a start, the real key to curbing output and increasing prices would be when Iran and Iraq, the two places were big increases are most likely this year, join in on the cuts.
“It is vital to note that there was not much incremental production expected from Russia, Qatar, and Venezuela for the rest of the year, given these countries are already stretching their production limits. Russian output, although currently near a post-Soviet peak, is expected to remain flat this year as decline rate catches up,” they explained.
As for the energy sector overall, Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence, said in a note that while he believes the worst of the pressure in the energy sector is likely behind the market, prices could slip further at a slower pace.
“If the (lack of) recovery in the financials sector since the 2007-09 bear market is any guide, it may take the energy group some time before getting back to breakeven,” he explained.
The energy sector is so far down 6.6% year to date, and the sixth-worst performer of the 10 sectors.
Elsewhere in the market, safe-haven assets continued to come under pressure Tuesday as investors flocked to riskier assets like equities. Gold prices dropped 2.55% to settle at $1,207 a troy ounce.
The yield on the benchmark 10-year U.S. Treasury bond rose 0.037 percentage point to 1.783%. Yields move in the opposite direction of prices.
The U.S. dollar rose 1% against a basket of global currencies.
On the economic data front: The latest regional manufacturing data didn’t give investors much hope that the factory sector would improve any time soon. The New York Federal Reserve’s Empire State manufacturing gauge came in worse than expected in February as it remained rooted in contraction territory. It rose to -16.64 during the month from -19.37 in January. Wall Street anticipated a bigger rise to -10. Readings above 0 point to expansion, while those below indicate contraction.
Homebuilder sentiment declined this month, according to data from the National Association of Home Builders. The gauge slipped to 58 for the month from 61 in January, the lowest level since May. Wall Street expected a decline to 60.
Minneapolis Federal Reserve President Neel Kashkari, in a speech at the Brookings Institution, took a shot at Wall Street, saying he believes the nation’s biggest banks are still too big to fail. He said Congress should consider passing banking reform legislation that goes far beyond Dodd-Frank by either breaking up the banks, forcing them to hold more capital, or taxing leverage to reduce risk.
It was Kashari’s first speech since taking over the regional Fed bank in January, and unusual in the sense that generally Fed officials limit public remarks to monetary policy.
Part of the market's momentum came from remarks by ECB President Mario Draghi on Monday. He appeared before the European Parliament’s Economic and Monetary Affairs Committee and again reiterated his position the central bank is ready to take whatever action necessary to boost inflation in the region. Draghi said the central bank will analyze the effectiveness of its monetary policy efforts and how it has impacted the overall financial system and banks in particular.
The ECB's next meeting comes in March, a gathering at which some speculate policy makers could drop rates further into negative territory.
Stocks in Europe rallied on the news Monday, which helped fuel momentum in the U.S., but switched gears Tuesday after word from four of the world's largest oil producers sent markets lower.
The Euro Stoxx 50, which tracks large-cap companies in the eurozone, and the UK’s FTSE 100 were mostly flat, while the French CAC traded slightly higher, and the German Dax dipped into negative territory.