Stocks rose Thursday thanks in part to a continuing rally in oil and optimism that the Federal Reserve will hold off raising interest rates until after the November elections.
Oil jumped 3.1% to $48.22 a barrel and is now up 20% from earlier this month and 80% in the past six months. The recent rally in crude is due to speculation that Russia and Saudi Arabia will reach an agreement to limit production, potentially at their next meeting in late September.
The major indices all closed at or near their highs of the day, but are still range-bound. Energy stocks led the advance, with major gainers including Chesapeake Energy Corporation (NYSE:CHK), up 9.2%, and Marathon Oil Corporation (NYSE:MRO), up 6.2%. Blue chips Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) gained 0.9% and 1.3%, respectively.
The retail sector also performed well, with SPDR S&P Retail (ETF) (NYSEARCA:XRT) up 0.9%, boosted by positive reports from L Brands Inc (NYSE:LB) and Wal-Mart Stores, Inc. (NYSE:WMT).
Gold settled up 0.7% at $1,357.80 an ounce, after the Fed’s minutes showed central bankers were split on whether to raise rates.
At Thursday’s close, the Dow Jones Industrial Average gained 24 points at 18,598, the S&P 500 rose 5 points to 2,187, the Nasdaq was up 11 points at 5,240, and the Russell 2000 added 9 points at 1,237.
The NYSE Composite’s major exchange traded 755 million shares with total volume of 3.3 billion. The Nasdaq crossed 1.6 billion shares. On the Big Board, advancers outpaced decliners by 2.4-to-1, and on the Nasdaq, advancers led by 2.2-to-1. Block trades on the NYSE fell to 4,469 from 4,631 on Wednesday.
A close-up view of the S&P 500’s daily chart, covering about two months of trading, shows the Brexit panic on June 24, followed by a reversal day that closed on the high of the day.
That started a seven-day rally that terminated with a minuscule series of new highs within a very narrow channel. On most days, the channel saw below-average volume, indicating a lack of interest on the part of both buyers and sellers. The same pattern exists on the charts of the Dow (shown in the previous Daily Market Outlook), the Nasdaq and the Russell 2000.
Conclusion
Although the pattern may be boring — flatlining at recurring highs — it is still bullish, as it appears that many of the bears were wiped out by the Brexit bear trap.
Support rests at the S&P 500’s 20-day moving average around 2,176. But successive daily reversals with the index closing at the high of the day are bullish and indicate that a breakout may soon resolve the narrow consolidation.
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.
