Oil spurt drives Dow to record, but most stocks drop

Author: Associated Press
Photo via Kevin Hutchinson / CC BY 2.0

NEW YORK (AP) – Stocks mostly fell on Monday, but a spurt in oil prices helped push the energy sector higher and the Dow Jones industrial average to another record.

The Dow rose 39.58 points, or 0.2 percent, to extend its record set on Friday. The Standard & Poor’s 500 index, which is the benchmark for many more investors than the Dow, pulled back from its own record, also set on Friday, and dipped 2.57 points, or 0.1 percent, to 2,256.96. The Nasdaq composite fell 31.96, or 0.6 percent, to 5,412.54.

The Dow was able to make the lone gain among the big three indexes partly thanks to Exxon Mobil and Chevron. They rose with oil, which touched its highest price since the summer of 2015 after OPEC persuaded Russia and 10 other oil-producing nations to announce production cuts over the weekend.

Energy stocks in the S&P 500 rose 0.7 percent, and they were among the six sectors to rise of the 11 that make up the index.

Still, nine stocks fell on the New York Stock Exchange for every five that rose, and the day’s loss marked the end of a six-day winning streak for the S&P 500, its longest such run since June 2014.

Some investors say they’re taking a more cautious, wait-and-see approach following the market’s strong run over the last month. The S&P 500 has climbed 5.4 percent since the presidential election on expectations that proposed tax cuts will lead to higher profits for businesses and less regulation may create stronger economic growth.

“Unless and until we see hard evidence of the economy picking up, we’re going to take these profits as a gift and pocket them,” says Rich Weiss, senior portfolio manager at American Century. Mutual funds that he oversees have been paring back their stock investments in recent days and weeks as the price tags for them have shot higher.

Donald Trump’s surprise presidential election victory has also driven expectations for inflation higher, which have helped to drive bond yields upward. Inflation is one of bond investors’ biggest fears, and they’re demanding higher yields in order to compensate for the perceived increase in risk.

The yield on the 10-year Treasury note rose above 2.50 percent to its highest level since autumn 2014 before settling back at 2.47 percent on Monday, where it was on late Friday.

When the Federal Reserve wraps up its two-day policy meeting on Wednesday, investors almost universally expect it to raise short-term interest rates for just the second time in a decade.

The central bank has held interest rates at close to zero since the Great Recession in hopes of driving economic growth, though the low rates have also squeezed savers looking for income from bank accounts and bonds.

The price of U.S. benchmark crude rose $1.33, or 2.6 percent, to settle at $52.83 per barrel in New York. The price of Brent crude, the international standard, rose $1.36, or 2.5 percent, to close at $55.69 a barrel in London.

That helped Exxon Mobil to rise $1.98, or 2.2 percent, to $90.98. Chevron rose $1.34, or 1.2 percent, to $117.15, and ConocoPhillips rose 61 cents, or 1.2 percent, to $51.38.

The biggest loss in the S&P 500 came from Alexion Pharmaceuticals, which dropped $16.99, or 12.9 percent, to $115.08 after the company named an interim CEO and a new chief financial officer. The biopharmaceutical company is in the midst of an investigation into its sales practices.

Viacom had the second-biggest decline in the index. The media company, which owns Paramount, Comedy Central and MTV, and fell $3.63, or 9.4 percent, to $34.99. National Amusements, which controls both Viacom and CBS, said it’s no longer looking to combine the two.

Natural gas dropped 23.9 cents, or 6.4 percent, to settle at $3.507 per 1,000 cubic feet, giving up some of its big gains from the past month. Natural gas, which often rises with expectations of colder temperatures and increased electricity usage, rose last week to its highest price in two years.

Wholesale gasoline rose 4 cents to $1.54 per gallon, and heating oil rose 3 cents to $1.67 a gallon.

Gold rose $3.90, or 0.3 percent, to $1,165.80 per ounce. Silver rose 22 cents to $17.19 an ounce and copper fell 3 cents to $2.62 per pound.

The dollar fell against many of its rivals, including the British pound and Canadian dollar. The euro rose to $1.0630 from $1.0551, and the dollar fell to 115.12 yen from 115.23 yen.

In Europe, Britain’s FTSE 100 stock index fell 0.9 percent and Germany’s DAX shed 0.1 percent. France’s CAC 40 was down 0.1 percent. In Asia, Japan’s Nikkei 225 index rose 0.8 percent South Korea’s Kospi index inched up 0.1 percent and Hong Kong’s Hang Seng fell 1.4 percent.

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