Posted on 05/09/2018 10:44:42 AM PDT by Red Badger
Stocks rose on Wednesday as energy shares jumped on the back of a strong rally in oil prices. The index's move higher follows President Donald Trump's decision to pull the U.S. out of the Iran nuclear deal.
As of 1:29 p.m. ET, the Dow Jones industrial average traded 200 points higher, with Chevron and Exxon Mobil among the best-performing stocks in the index. The Nasdaq composite advanced 0.9 percent.
The S&P 500 traded 0.9 percent higher, with energy rising more than 2 percent. Marathon Oil was one of the best-performing stocks in the S&P 500, rising 4.2 percent.
Chevron and Exxon Mobil both rose more than 1.5 percent, while the Energy Select Sector SPDR Fund (XLE) gained 1.8 percent. U.S. oil rose 3.3 percent to trade at $71.34 per barrel.
Trump said Tuesday that the U.S. would be walking away from the Iran deal and that sanctions on the Middle Eastern country would be reinstated. In the run-up to the 2016 presidential election, this was a campaign promise that Trump had pledged.
"This would have been much more shocking a year ago (when [Brent] oil was US$50) than now (with oil at US$75)," said Hasnain Malik, head of equity research at Exotix Capital, in a note to clients.
"Longer term, this event further narrows the space for countries that would benefit from cooperation with both the US (and its closest regional allies Israel, Saudi and the UAE) and Iran to chart a neutral path, and may portend a weakening of the US-EU strategic relationship," Malik said.
Following the announcement, countries around the world reacted differently. While some nations in the Middle East commended the move made, U.S. allies in Europe did not. The president of Iran, Hassan Rouhani, said that his country would continue to commit to the nuclear deal, according to Reuters.
"Clearly, this is playing out in the energy sector," said Bill Northey, senior vice president at U.S. Bank Wealth Management. "But you've also got interest rates rising. That's impacting the rate-sensitive sectors of the market."
Utilities, a sector adversely affected by higher rates, was one of the worst-performing spaces on Wednesday, sliding 0.6 percent.
The 10-year Treasury yield reclaimed its position above the 3 percent mark on Wednesday, a level that recently put markets on edge. The two-year note yield also traded at its highest level in nearly a decade.
Equities closed flat on Tuesday after a choppy trading session. Since late March, stocks have traded in a tight range, with the S&P 500 bouncing between its 50-day and 200-day moving averages, two key technical levels.
"The market had traded up so much late last year and early this year," said Greg Luken, CEO of Luken Investment Analytics. "It takes time to digest that."
In corporate news, Walmart dropped more than 4 percent. The retailer's stock fell after it agreed to buy 77 percent of Flipkart for $16 billion. Flipkart is am e-commerce company based in India.
—CNBC's Tom DiChristopher contributed to this report
Winning?
Woo-hoo…..drill, Baby, drill! Texas has more than enough energy just waiting to come out of its blessed shale.
So far!......................
I’ll bet this really pissed Pocahontas off.
Statistical noise. The DOW jumps and/or drops that much almost every couple of hours anymore.
Keep in mind that the US is a net oil exporter.
Yeah. 200 was a “jump” back in 2000. Now it’s a blip.
The EU, parasite that it is, is going to choose Iran over America, America which is one of the largest importers of their goods and the guarantor of their security..... If the EU goes down that path they are delusional and outright idiotic.
So no chance of seeing gas prices come down?
It will make no difference.
The Iranian oil will make it to market just like it did before, surreptitiously thru a 3rd party..........
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