On a day when the U.S. markets initially seemed to be lacking in energy, it was the energy stocks that helped lift the indices to a solid closing.
Stocks fell early after the Institute for Supply Management report that its index of national factory activity declined from 55.1 in December to 53.5 in January. This was the lowest index reading since January 2014, and it was also negative because economists were predicting it would come in at 54.5.
Although anything above 50 is positive, it was the slowing of the number that had traders concerned.
But stocks rebounded strongly throughout the afternoon, and by the finish, the Dow Jones Industrial Average had risen 1.1%, while the S&P 500 climbed 1.3% and the Nasdaq Composite gained 0.9%.
Although basic materials and the telecommunication sectors were robust today, it was the energy sector that easily led the market today. Stocks such as Chesapeake Energy Corporation (NYSE:CHK), Seadrill Ltd (NYSE:SDRL), and Solarcity Corp (NASDAQ:SCTY) led the way to finish as three of today’s best stocks.
Chesapeake Energy Corporation (CHK)
Many of the energy stocks were boosted today by Exxon Mobile Corporation’s (NYSE:XOM) earnings report of $1.56 per share that exceeded analysts’ expectations, despite being down substantially from last year’s same quarter numbers, and a firming of oil prices due to a 7% decline in the number of operating rigs in the U.S. This was the steepest decline on record.
CHK stock rose nearly 7% and once again crossed above its 50-day moving average in the process.
Seadrill Ltd (SDRL)
SDRL was up 10% on solid volume of 20.4 million shares, as it also benefited from the news that pushed CHK higher. In addition, the driller stocks were stronger as traders took note of Brent oil closing above its 20-day moving average on Friday for the first time in many months.
SDRL stock has been a very poor performer, falling from $40 in January 2014 to below $10 three weeks ago. But the stock, which recently saw its near-40% dividend suspended, has bounced back over nicely in recent days. Today was SDRL’s best performance in months.
Solarcity Corp (SCTY)
The oils weren’t the only energy companies to get a boost today. Many of the solar companies, whose stocks have recently languished, were also higher as traders saw a connection between increasing oil prices and the need for solar energy.
SCTY stock was one of the leading solar issues today, up more than 8%. The company said it will announce fourth-quarter and full year earnings on Feb. 18 after the closing bell.
SCTY stock has been in a downward trend since September, when it was near $72 a share. It closed today below $53.
As of this writing, Ethan Roberts did not hold any positions in the aforementioned securities.
