Energy Stocks Help Lead Rebound On Wall Street As Oil Prices Spike

(RTTNews) - Following the sharp pullback seen in the previous session, stocks showed a strong move back to the upside during trading on Tuesday. The major averages fluctuated early in the session but climbed firmly into positive territory as the day progressed.

The major averages finished the session near their best levels of the day. The Dow rose 167.71 points or 0.6 percent to 30,391.60, the Nasdaq jumped 120.51 points or 1 percent to 12,818.96 and the S&P 500 climbed 26.21 points or 0.7 percent to 3,726.86.

Energy stocks helped to lead the rebound on Wall Street, benefiting from a substantial increase by the price of crude oil.

Crude for February delivery spiked $2.31 to $49.93 a barrel as Saudi Arabia said it would cut oil production by 1 million barrels a day as part of a deal with OPEC and its allies to keep overall production levels largely unchanged.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index skyrocketed by 7.5 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index surged up by 5.1 percent and 4.8 percent, respectively.

Significant strength also emerged among steel stocks, as reflected by the 3.7 percent jump by the NYSE Arca Steel Index. The index ended the session at its best closing level in well over two years.

Chemical stocks also turned in a strong performance on the day, driving the S&P Chemical Sector Index up by 2.6 percent to a record closing high.

Airline, tobacco and semiconductor stocks also showed notable moves to the upside, while gold stocks gave back some ground after Monday's rally.

The strength on Wall Street also came as traders generally remain optimistic about an economic recovery despite the recent spike in coronavirus cases.

Adding to the positive sentiment, a report released by the Institute for Supply Management showed an unexpected acceleration in the pace of growth in manufacturing activity in the month of December.

The ISM said its manufacturing PMI climbed to 60.7 in December after dipping to 57.5 in November, with a reading above 50 indicating growth. Economists had expected the index to edge down to 56.6.

With the unexpected increase, the manufacturing index reached its highest level since hitting 61.3 in August of 2018.

However, economists noted the headline index was artificially boosted by a jump by the supplier deliveries index, which suggested deliveries slowed at a faster rate.

Buying interest was also kept somewhat in check as traders await the results of two key Senate runoffs in Georgia.

The outcome of the runoff elections will determine which party controls the Senate and could have a major impact on what President-elect Joe Biden is able to accomplish.

Even with a Democratic-controlled Senate, Biden may still face difficulty pushing through his proposed tax policies but could have more success on issues like government spending, including increasing the size of stimulus checks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday. Japan's Nikkei 225 Index fell by 0.4 percent, while China's Shanghai Composite Index advanced by 0.7 percent.

The major European markets also finished the day mixed. While the U.K.'s FTSE 100 Index rose by 0.6 percent, the French CAC 40 Index dropped by 0.4 percent and the German DAX Index slid by 0.6 percent.

In the bond market, treasuries moved to the downside after ending the previous session nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.8 basis points to 0.955 percent.

Looking Ahead

The results of the Georgia runoffs are likely to attract attention on Wednesday along with a report on private sector employment and the minutes of the latest Federal Reserve meeting.