Energy shares power Wall Street higher

A street sign, Wall Street, is seen outside New York Stock Exchange (NYSE) in New York City, New York, January 3, 2019. — Reuters pic
A street sign, Wall Street, is seen outside New York Stock Exchange (NYSE) in New York City, New York, January 3, 2019. — Reuters pic

NEW YORK, June 13 — Gains in energy shares helped Wall Street’s main indexes snap two days of weakness and trade higher today, with hopes of an interest rate cut adding to the upbeat sentiment.

Crude prices rose as much as four per cent, a day after hitting five-month lows, after a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz, through which a fifth of global oil consumption passes.

The S&P energy index jumped 1.21 per cent, the most among the 11 major sectors. Shares of oil majors Exxon Mobil Corp and Chevron Corp rose one per cent each.

“There is a positive correlation between stock markets and oil prices which is the day’s catalyst,” Scott Brown, chief economist at Raymond James in St Petersburg, Florida.

Wall Street’s main indexes have had a strong start to the month on hopes that the Federal Reserve will act to counter a slowing global economy due to the escalating trade war with China. The benchmark S&P 500 index has risen five per cent so far in June.

US consumer prices data yesterday pointed to a moderate rise in inflation, adding to expectations of an interest rate cut as early as July. The Fed policymakers are set to meet on June 18-19 and markets have priced in at least three rate cuts in 2019.

But on the trade front, there were doubts about any improvement in what President Donald Trump called “testy” trade relations with China in the run up to the G20 summit later in this month.

“There is still uncertainty about trade policy and about what the Fed is going to do. That is still keeping a lot of people back on their heels at this point,” Brown said.

Walt Disney Co shares rose 2.56 per cent, pushing the communication services sector 0.80 per cent higher, after Morgan Stanley raised its forecast for Disney Plus subscriber growth.

At 9:53am ET the Dow Jones Industrial Average was up 109.90 points, or 0.42 per cent, at 26,114.73, the S&P 500 was up 13.06 points, or 0.45 per cent, at 2,892.90 and the Nasdaq Composite was up 51.41 points, or 0.66 per cent, at 7,844.13.

Offering the biggest boost to the indexes were gains in marquee companies Facebook Inc, Apple Inc, Amazon.com Inc, Microsoft Corp and Alphabet Inc, which rose between 0.5 per cent and 1.1 per cent.

Tyson Foods rose 1.51 per cent after the meat processor launched its first vegan and mixed protein products. Shares of vegan burger maker Beyond Meat dropped 1.65 per cent.

Twitter Inc shares fell 3.26 per cent, the most among S&P 500 companies, after brokerage Moffett Nathanson said it expects the social media company’s costs to rise and revenue growth to slow.

Advancing issues outnumbered decliners by a 3.87-to-1 ratio on the NYSE and a 2.48-to-one ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and one new low, while the Nasdaq recorded 32 new highs and 24 new lows. — Reuters