Markets closed higher on Wednesday, driven by a rally in energy stocks, as oil prices soared. The rise in oil prices followed President Donald Trump’s decision to pull out of the Iran nuclear deal a day earlier. Moreover, the broader market also got a boost from financial stocks. This saw all three major indexes ending the day in positive territory.
The Dow Jones Industrial Average (DJI) rose 0.8%, to close at 24,542.54, registering its fifth straight day of gains. The S&P 500 increased 1% to close at 2,697.79. The Nasdaq Composite Index closed at 7,349.91, increasing 1%. The CBOE Volatility Index (VIX) closed down 1.29 points at 13.42, its lowest since Jan 26, 2018. A total of 7.1 billion shares were traded on Wednesday, higher than the last 20-session average of 6.6 billion shares. Advancers outnumbered decliners on the NYSE by a 1.71-to-1 ratio. On Nasdaq, a 1.65-to-1 ratio favored advancing issues.
How did the Benchmark Perform?
The Dow gained 182.33 driven by a rally in tech stocks. Of the 30 blue-chip companies 23 registered gains. DowDuPont Inc. DWDP was the best performer on the index, gaining 2.8%. However, Walmart Inc. WMT was one of the biggest losers, declining 3.1%. Walmart has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The S&P 500 gained 25.87 points. Nine of the 11 major S&P 500 sectors ended the day in positive territory. Energy Select Sector SPDR Fund (XLE) gained 2%, followed by Financial Select Sector SPDR Fund (XLF) gaining more than 1%. Meanwhile, the tech-heavy Nasdaq gained 73.00 points.
Oil Prices Rise Bossing Energy Stocks
Oil prices hit a three and-half-year high on Wednesday following Trump’s decision to abandon the 2015 Iran nuclear deal a day earlier. WTI Crude Oil increased 2.9% to $71.14 a barrel, while Brent Crude Oil rose 3.1% to $77.21 per barrel.
On Tuesday, Trump had said that the United States would re-impose sanctions on Iran. This gave rise to speculation of increasing level of conflict in the Middle East, which could result in curtailing global oil supplies. This saw oil prices shooting up resulting in a rally in energy stocks.
Financial Stocks Gain
This rise in oil prices increased inflationary pressure. This in turn lead to possibility of further rate hikes by the Fed, eventually boosting financial shares.
As inflationary pressure is expected to build up with the rise in oil price, bonds are becoming less appealing resulting in its yield to go up. This rise in yield again helped financial stocks move north. The 10-year Treasury yield once again crossed the psychological 3% mark.
Stocks That Made Headlines
Enbridge Inc.’s ENB indirect subsidiary — Enbridge (U.S.) Inc — has inked a definitive agreement with AL Midcoast Holdings, LLC (AL Midcoast), an affiliate of ArcLight Capital Partners, LLC, for sale of Midcoast Operating, L.P. and its subsidiaries (Midcoast). (Read More)
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Gol Linhas Aereas Inteligentes S.A. (GOL): Free Stock Analysis Report
Enbridge Inc (ENB): Free Stock Analysis Report
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
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Walmart Inc. (WMT): Free Stock Analysis Report
Dow Chemical Company (The) (DWDP): Free Stock Analysis Report
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