MARKET SNAPSHOT: U.S. Stocks Climb As Crude Oil Rallies To 15-month High

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By Sue Chang, MarketWatch , Ryan Vlastelica

Intel falls, but Morgan Stanley is the latest financial to top forecasts

U.S. stocks closed higher for a second session Wednesday, boosted by a rally in the energy sector and stronger-than- expected quarterly results from Morgan Stanley. The Federal Reserve's Beige Book, an anecdotal economic survey, also indicated that the U.S. economy continues its modest, albeit steady, expansion.

"For a number of weeks we've had unexpected inventory draws in the U.S. [so] part of the bear case on oil is being damaged," said Patrick Kaser, a portfolio manager at Brandywine Global Investment Management. "Skeptics said we'd have inventory builds after recent storms, but they've simply been wrong so far."

The S&P energy sector rose 1.4%, by far the biggest gainer on the day, helping the S&P 500 index rise 4.69 points, or 0.2%, to close at 2,144.29.

Morgan Stanley ( MS ) climbed 1.9% after it reported a profit that beat analyst forecasts ( story/morgan-stanley-profit-boosted-by-trading-revenue-2016-10-19). The stock was the latest in a string of financials - - including Goldman Sachs Group Inc.(GS) and J.P. Morgan Chase & Co. (JPM) -- that topped consensus expectations and boosted equities ( loom-2016-10-18). The S&P financial sector rose 0.8%.

"Not only have these financials beat, but they've beat pretty solidly, which has led to some upside," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.

An emerging belief among investors that banks can "actually make decent money even in the current environment" is also buoying financial shares, Kaser said.

The Dow Jones Industrial Average advanced 40.68 points, or 0.2%, to finish at 18,202.62 and the tech-heavy Nasdaq Composite Index rose 2.58 points to close at 5,246.41.

Intel Corp. (INTC) was the worst performer in both the Dow and the S&P 500 after it reported a disappointing revenue outlook (, even as its third- quarter earnings rose almost 9%. The stock slumped 5.9%.

Read:The Intel money pit: Renovations cost more, no results in sight ( money-pit-renovations-cost-more-no-results-in-sight-2016-10-18)

Still, the mood in the market is generally subdued, according to Steven Ricchiuto, chief economist for Mizuho Securities USA, due to worries over valuation as stocks are trading near levels that had triggered strong sales in the past. Currently, the S&P 500 is about 2% below its intraday record.

"The domestic equity market appears to be struggling against valuation concerns even though this morning's earnings releases were fairly positive," he said in a note. "When good news doesn't lead to solid gains it is a sign that markets are overbought."

The coming election is also keeping some investors from actively participating in the market, according to the economist.

"Trading volumes have also been disappointing. Our read on this situation is that investors are beginning to realize that the upcoming election will do little to correct the problems confronting the domestic economy," Ricchiuto said.

Major stock-market indexes have mostly been trading within a narrow range ahead of the U.S. presidential election between Democratic nominee Hillary Clinton and Republican candidate Donald Trump.

"We're not in a bad position, but we haven't made much progress since July, and I don't see that changing with the big election we have coming up, which has a lot of people uneasy," said Frederick.

The third and final presidential debate will take place Wednesday evening.

Read: Wall Street wants Donald Trump to be beaten, but not crushed ( streets-new-election-black-swan-2016-10-18)

( read:Irish bookie already paying out on Hillary Clinton victory bets ( hillary-clinton-victory-bets-2016-10-18)

Wednesday also marks the 29th anniversary of Black Monday, when on Oct. 19, 1987, stock markets crashed around the world.

Read:Chart watcher: Stop comparing 2016 stock market to 1987 ( comparing-2016-stock-market-to-1987-2016-10-18)

Stocks to Watch:Yahoo Inc.(YHOO) shares gained 2.5% after the internet company reported better-than-expected third- quarter earnings ( 2016-10-18).

Supervalu Inc.(SVU) tanked 8.8% after the grocery-store operator said its revenue fell ( story/supervalu-revenue-falls-as-it-shifts-to-wholesale-2016-10-19) in the second quarter.

Reynolds American Inc.(RAI) dropped 2.1% after earnings and revenue fell short ( reynolds-american-misses-third-quarter-earnings-revenue-expectations-2016-10-19). On the upside, Halliburton Co.(HAL)(HAL) rallied 4.3%.

In the latest economic data, the Beige Book suggested that the U.S. economy remains on track for modest growth (http:/ / while wages continue to rise steadily.

Housing starts fell 9% in August ( elusive-2016-10-19), the slowest pace since March 2015. The data was a setback for the housing market, though the starts were offset by a rise in monthly building permits.


Gold rose 0.6% while the ICE dollar index was flat.

Read:Why gold will rise no matter who becomes the next president ( no-matter-who-becomes-the-next-us-president-2016-10-18)

( 19)The Stoxx Europe 600 index ( oil-prices-2016-10-19) logged moderate gains, while Asian stocks ( as-china-reports-healthy-growth-2016-10-18) finished mixed. The Shanghai Composite Index closed mostly unchanged after data showed better-than-expected growth ( 18) in China, but slower industrial production.

--Barbara Kollmeyer contributed to this article.

  (END) Dow Jones Newswires
  Copyright (c) 2016 Dow Jones & Company, Inc.

This article appears in: Energy , US Markets , Economy , Commodities
Referenced Symbols: MS

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