Energy stocks propels Wall Street profits following oil price rally
Wall Street ended higher on Tuesday trading session as energy stocks rallied helped by increasing crude prices. The US crude prices reached its new height in 2016. The 10 sectors listed in S&P finished higher while Dow registered its best performance in nearly a month on Tuesday. The energy stock index .SPNY recorded a 2.8% high, with Chevron and Exxon Mobil shares contributing the most to the S&P 500.
Even the worst performer in 2016, SPSY, increased 1.3% as investors raised their shares in the market ahead of the earnings season. According to Thomson Reuters, I/B/E/S, profits at S&P 500 are anticipated to have declined 7.8% during the first quarter, making things easier for firms to record positive results.
Reuters quoted Peter Kenny, market analyst at Global Markets Advisory, who said, "Because of lowered expectations, markets have a way of popping a little bit before the earnings set in." Among the Wall Street gainers, Dow Jones Industrial average recorded an increase of 164.84 points, or 0.96%, to 17,721.25. While the S&P 500 increased 19.73 points, or 0.97%, to 2,061.72 and the Nasdaq Composite was up 0.8%, or 38.69 points, to 4,872.09.
The energy stocks boosted Wall Street movement on Tuesday as oil prices reached its new height after a record low in the beginning of 2016. West Texas Intermediate gained 4.5% to $42.17 per barrel. The price of Brent crude increased 3.9% to $44.50 per barrel. The oil price rallied in the commodity market after an optimistic report from Russia and Saudi Arabia, agreeing to maintain their production at January levels.
Chesapeake Energy gained a major share in the industry after its announcement of a new credit line and Marathon Oil recorded a robust profit after disclosing its intention to sell its assets worth at $950 million in order to elevate its balance sheet. However, the energy sector continues to remain down 17.8% for the past 12-month period, Financial Times reported.
Meanwhile, Alcoa shares dropped 2.7% to $9.48 after posting weak quarterly results, wounded by poor commodity prices. Juniper Networks lost 7.4% to $23.06 after it reduced its revenue and profit forecast. The S&P 500 recorded 11 fresh 52-week highs and 4 fresh lows while the Nasdaq registered 29 fresh highs and 26 fresh lows.
Light crude delivery for May shored up $1.81, or 4.5%, to $42.17 per barrel on the Mercantile Exchange in New York, reaching the highest point since November. THE WALL STREET JOURNAL quoted the US Energy Information Administration, which said that the crude output in the US dropped by 90,000 barrels per day during the period from February to March. The output in the country has declined to 9 million barrels per day during March from a height of 9.7 million barrels per day in April 2015.
The decision by major oil producers like Russia and Saudi Arabia to freeze output boosted oil prices, helping energy stocks to gain in the market. These energy shares fuelled Wall Street profits on Tuesday.