Stocks closed slightly higher Monday, once again driven by rising oil prices. The Dow Jones Industrial Average rose 0.4% and the S&P 500 gained 0.1%. The Russell 2000 led, up 1.1%, due in part to big advances in small-cap energy stocks.
Oil was up 5.5% Monday to $37.90 a barrel, resulting in gains for energy stocks of all sizes. Dow 30 members Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX) gained 2.6% and 3.1%, respectively. Smaller Southwestern Energy Company (SWN) and Murphy Oil Corporation (MUR) jumped 9.7% and 12.6%, respectively.
The Wall Street Journal reported some U.S. traders were waiting for news of a possible stimulus move from the European Central Bank (ECB), which meets on Thursday, before taking new positions.
The Stoxx Europe 600 fell 0.3%, pulled lower by bank stocks, including Deutsche Bank AG (USA) (DB), which fell almost 1%.
The Shanghai Composite was up 0.8% after the Chinese government discussed plans to boost economic growth, which authorities said will come in at 6.5% to 7% this year.
Gold dropped 0.5% to $1,263.20 an ounce. The yield on the 10-year Treasury note rose to 1.91%, up from 1.88% on Friday.
At Monday’s close, the Dow Jones Industrial Average gained 67 points at 17,074, the S&P 500 rose 2 points to 2,002, the Nasdaq fell 9 points to 4,708 and the Russell 2000 was up 12 points at 1,094.
The NYSE Composite’s primary exchange traded 1.1 billion shares with total volume of 4.9 billion. The Nasdaq crossed 2 billion shares. On the Big Board, advancers outpaced decliners by 2-to-1, and on the Nasdaq advancers led by 2.2-to-1. Block trades on the NYSE fell to 6,583 from 8,785 on Friday.
The United States Oil Fund LP (ETF) (USO) is a commodity ETF that attempts to track WTI oil prices. USO ran from a low of $7.67 on Feb. 11 to Monday’s high at $10.15, an advance of more than 30%. During the same time, WTI has rallied from a low in the mid-$20s to just under $38 currently.
Conclusion
The latest short interest report from the NYSE Group shows energy companies Chesapeake Energy Corporation (CHK), Freeport-McMoRan Inc (FCX), Petroleo Brasileiro SA Petrobras (ADR) (PBR) and Transocean LTD (RIG) were among the top 10 biggest short positions.
This report is issued twice a month and is useful for traders looking for stocks that could rally sharply on a short-covering panic. It also contains pertinent information such as the percent of float held short and the number of days to cover.
Regarding the Trade of the Day, Transocean, the report tells us that 36% of the float was short, and that under normal volume conditions (12.4 million shares), it would take 11 days to cover all of the shorts. But in just two days, RIG stock has traded more than 80 million shares. Thus, I would conclude that much of the volume was buyers covering their short sales.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
