U.S. Stocks Rise as Crude Rally Boosts Energy, Offsets Earnings

U.S. Stock Rally Stalls as Earnings Season Kicks Off
  • Alcoa, Jupiter slump after worse-than-forecast sales figures
  • Crude gains lead commodities higher as dollar stumbles

U.S. stocks rose to a one-week high as crude pushed past $42 a barrel to overshadow a tepid start to the first-quarter earnings season.

Energy producers surged 2.7 percent as crude climbed to a four-month high after Saudi Arabia and Russia were seen agreeing on whether to freeze oil production. Chesapeake Energy Corp. surged the most on record after pledging assets to maintain access to financing. Alcoa Inc. slid 3.4 percent after the largest U.S. aluminum producer cut its forecast for global demand. Juniper Networks Inc. plunged 7.5 percent after sales missed forecasts, dragging the semiconductor industry lower.

The S&P 500 added 1 percent to 2,061.74 at 4 p.m. in New York. The index has alternated gains and losses for four days and is now little changed for the month of April. The Dow Jones Industrial Average climbed 165.05 points, or 0.9 percent, to 17,721.46.

“Oil prices have really been the driver of sentiment,” said David Spika, global investment strategist for GuideStone Capital Management. “There’s continued positive sentiment that is a function of a more dovish Fed as well as continued oil price strength and weakness in the dollar.”

West Texas Intermediate rose 4.5 percent in New York. Saudi Arabia and Russia have reached a consensus on an output freeze, Interfax said Tuesday, citing an unidentified “informed diplomatic source” in Doha.

The rally in crude is overshadowing the start of earnings season that is forecast to be the worst since the financial crisis, with analysts projecting first-quarter profits shrank 10 percent -- including a 20 percent decline for banks -- compared with earlier estimates for flat growth.

“We don’t have strong revenue growth -- that’s what we heard from Alcoa,” said Spika. “Until we have that, particularly with wage pressure, it’s hard to justify a move higher in the market. Investors are whistling past the graveyard and not focusing on the key issue. It’s a show me market, and we need earnings to push it forward from here.”

After a tumultuous start to the year that saw the S&P 500 tumble as much as 11 percent, U.S. equities rebounded 13 percent in the following six weeks. They are now little changed in the past two weeks after falling the most since February last week.

The Chicago Board Options Exchange Volatility Index slumped 7.9 percent to 14.97 on Tuesday, the lowest level in a week.

All 10 main S&P 500 groups advanced Tuesday, with energy and financial shares leading the way. JPMorgan Chase & Co. and Citigroup Inc. are among companies that report corporate results this week.

Among other stocks active on corporate news, Fastenal Co. lost 3.1 percent after also posting sales and earnings that missed the average analyst estimate.

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