U.S. Stocks Advance as Rally in Oil Boosts Commodity Producers

U.S. stocks rebounded from a weekly decline, led by energy and raw-materials producers as a rally in crude bolstered optimism that the drag from weakness in the oil patch will abate.

Oil and gas companies in the S&P 500 Index were headed toward the highest in 15 months after Russian President Vladimir Putin said his country is willing to consider freezing or even cutting oil output in cooperation with OPEC. Exxon Mobil Corp. advanced 2 percent to a one-month high. Mylan NV surged 9.3 percent after agreeing to pay $465 million to settle a probe over how the drugmaker charged Medicaid for its allergy shot EpiPen.

The S&P 500 climbed 0.7 percent to 2,168.39 at 10:06 a.m. in New York, reversing a 0.3 percent decline on Friday. The Dow Jones Industrial Average added 140.26 points, or 0.8 percent, to 18,380.75. The Nasdaq Composite Index increased 0.9 percent. West Texas Intermediate crude futures in New York rose 2.9 percent toward a four-month high.

“The gains today could be because Putin has said that he’s willing to reduce output and freeze production to increase the price of oil,” said John Conlon, chief equity strategist at People’s United Wealth Management which oversees $5.5 billion. “The earnings season is now going to be grabbing attention for the next three weeks. The market is still betting that Hillary Clinton will win the election.”

Equities are rising Monday in the face of risks from U.S. elections to higher borrowing costs and corporate earnings in the final quarter of the year, with strategists saying a holiday rally is not in the cards. Stocks have gotten off to a rocky start in October, with the S&P 500 ending a three-week winning streak as recent economic data and hawkish comments by Fed officials boosted speculation of a rate increase by year-end. The benchmark is 1 percent below a record reached in August.

A telephone poll by CNN indicated a win for Democratic nominee Hillary Clinton in Sunday’s second presidential debate, after Republican candidate Donald Trump’s campaign was hit over the weekend by a 2005 video in which he made vulgar comments made about women. Markets have proven imperfect in assessing past election outcomes, with the S&P 500 plunging between 2 percent and 5 percent on the days after victories by Barack Obama, a president who has presided over the second-longest bull market in U.S. history.

The most likely outcome of the 2016 race, and one with a “neutral” market impact, was a Democratic president and divided Congress,  Wells Fargo & Co. wrote last month. A similar scenario with a Republican presidency would be “slightly negative,” it said.

Amid a spate of strong economic reports, traders have boosted odds for a December hike to almost 68 percent, from 51 percent two weeks ago. They are pricing in a 17 percent chance of a move next month. A Bloomberg index tracking economic surprises turned positive last week for the first time since August. Minutes from the Fed’s September meeting will be released on Wednesday, while data on retail sales, producer prices and consumer sentiment are due Friday.

Investors are also seeking clues on the health of corporate America, as Alcoa Inc. unofficially kicks off the next earnings season on Tuesday. While analysts are forecasting a 1.6 percent contraction in third-quarter profits at S&P 500 members, U.S. firms on average have exceeded projections by an average margin of 3.6 percentage points in the past five years. If the trend continues, it will likely result in earnings growth for the period.

“There’s a lot to digest in this quarter -- earnings, politics and the Fed,” said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn, Germany. “It’s really not easy to assess how these factors will impact the market. The S&P 500 will struggle to make any meaningful strides by the end of the year, and investors sitting on even single-digit returns will be satisfied.”

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