U.S. stocks were able to eke out small gains Monday thanks in large part to resurgent energy and materials names, which helped the S&P 500 post gain of just under a tenth of a percent. The Dow Jones Industrial Average rose 0.4%, extending its winning streak to five days, while the Nasdaq Composite closed slightly lower as technology names lagged.
After climbing 9.5% last week, oil prices showed some follow-through on that move, surging more than 5.5% today. Brent oil, the global benchmark, rose above $40 per barrel for the first time in nearly three months. Data indicate professional traders are the least bearish on oil futures that they have been in 10 months.
Bullishness for energy and natural resources shares today was palpable, underscoring why Cliffs Natural Resources Inc (NYSE:CLF), E I Du Pont De Nemours and Co (NYSE:DD) and Peabody Energy Corporation (NYSE:BTU) are three of the day’s best stocks.
Cliffs Natural Resources Inc (CLF)
Iron ore prices remain in the dumps, but one of the commodity’s best intraday performances in recent memory helped lift shares of Cliffs Natural Resources by 18.7% on volume that was more than five times the daily average. That is impressive follow-through for shares of CLF considering the stock rose more than 6% last Friday. However, the stock traded up as much as 30% earlier today.
Iron ore prices were boosted Monday after Chinese politicians over the weekend said they are considering running a deficit in an effort to support growth in the world’s second-largest economy.
Iron ore prices have been rallying since the U.S. decided to implement tariffs on steel imports, a move seen as a significant blow to cheap Chinese exports of the raw material that have been flooding the U.S. market. U.S. tariffs on Chinese steel could be as high as 266%.
E I Du Pont De Nemours and Co (DD)
Shares of Du Pont, a member of the Dow Jones Industrial Average, rose 2.4% on volume that was nearly double the daily average on reports that German rival BASF SE is mulling an offer for DD, which in December agreed to a merger with Dow Chemical Co (NYSE:DOW).
A report from Bloomberg notes BASF is working with bankers and advisers to assess the merits of making a run at Delaware-based DD. The article adds BASF has been considering an offer for Du Pont since last year.
If its deal with Dow Chemical falls apart, DD would have to pay DOW a $1.9 billion breakup fee, according to Bloomberg.
Peabody Energy Corporation (BTU)
Rising commodities prices helped Peabody Energy, one of the largest U.S. coal miners, surge 41% on more than triple the average daily volume. It was reported that BTU laid off 15 staffers at its St. Louis headquarters after trimming 250 positions across the company last year.
Also, following a recent filing with the Securities and Exchange Commission, there is speculation that BTU will follow some of its rivals in seeking bankruptcy protection.
The filing notes BTU is in talks with creditors that would not guarantee existing debt and a media report notes one of BTU’s creditors is concerned the company has yet to file for bankruptcy protection.
At the time of this writing, Todd Shriber did not own any of the aforementioned securities.