U.S. stocks are climbing to their highest prices of 2016 Monday afternoon as oil prices also set annual highs, taking energy companies higher. Federal Reserve Chair Janet Yellen gave a mixed view of the economy, but banks are recovering as investors anticipate higher interest rates.
KEEPING SCORE: The Dow Jones industrial average gained 135 points, or 0.8 percent, to 17,941 as of 2:57 p.m. Eastern time. The Standard & Poor’s 500 index rose 13 points, or 0.6 percent, to 2,112. The Nasdaq composite index picked up 33 points, or 0.7 percent, to 4,975.
YELLEN’S TELLING: In a speech, Federal Reserve Chair Janet Yellen said the U.S. economy is improving, but it’s marked by so many uncertainties that it’s not clear when the Fed should resume raising interest rates.
Her remarks come after the government released a surprisingly weak May jobs report on Friday. Yellen, who called that report “disappointing,” had said recently that the Fed would probably raise interest rates in the next few months if the economy kept getting stronger. Now investors are less sure of the Fed’s plans. The central bank’s policymakers will meet next week.
THE QUOTE: Investment manager Luke Bartholomew of Aberdeen Asset Management said Yellen was noncommittal and investors may have been hoping for more details.
“I don’t think there was enough to sort of swing the market either way,” he said. Stocks weakened during Yellen’s remarks but later recovered to reach new highs for the day.
ENERGY: Benchmark U.S. crude oil rose $1.07, or 2.2 percent, to $49.69 a barrel in New York. That’s its highest closing price this year. Brent crude, which is used to price international oils, gained 91 cents, or 1.8 percent, to $50.55 a barrel in London. That brought energy companies higher. Exxon Mobil added 72 cents to $89.09 and Chevron picked up 42 cents to $101.08.
Independent analyst Jim Ritterbusch said oil prices rose because the dollar has weakened since the disappointing jobs report, and acts of sabotage in Nigeria have sapped the country’s oil production, boosting crude prices.
OIL TURMOIL: The price of oil has rebounded over the last few months, but it’s far lower than it was two years ago, and that’s causing a lot of pain for energy companies.
Oil and gas exploration company Devon Energy said Monday it will sell almost $1 billion in assets later this year, sending its stock up $1.61, or 4.5 percent, to $37.53. Oilfield services company Hercules Offshore filed for Chapter 11 bankruptcy protection for the second time in less than a year. Hercules plans to sell all of its assets to pay off investors, including international divisions. Its stock lost 12 cents, or 8.5 percent, to $1.29.
Rival oilfield service company Halliburton gained $1.95, or 4.6 percent, to $44.80 and Baker Hughes rose $3.19, or 6.9 percent, to $49.43.
BANKS: Banks traded higher as bond yields made a modest recovery after a big drop on Friday. As bond prices fell, the yield on the 10-year U.S. Treasury note rose to 1.72 percent from 1.70 percent. Higher bond yields drive interest rates higher on long-term loans such as mortgages, which helps banks make more money from lending. JPMorgan Chase rose 93 cents, or 1.4 percent, to $65.57 and Citigroup picked up 57 cents, or 1.3 percent, to $45.96. Banks are the worst-performing industrial sector in the S&P 500 this year.
FERTILIZER: CF Industries climbed $2.43, or 8.5 percent, to $31.04 and Mosaic rose $1.69, or 6.3 percent, to $28.39. That helped pull materials and chemicals companies higher.
ABBVIE STUDY: Drugmaker AbbVie slid after investors were disappointed with results from a study of a lung cancer drug AbbVie is acquiring. In April AbbVie agreed to buy StemCentrx for $5.8 billion, gaining the company’s stem cell treatment ova-T in the process. But after the results were announced, AbbVie declined $2.29, or 3.5 percent, to $62.71.
NOT HUNGRY FOR TYSON: Food producer Tyson Foods slumped after a BMO Capital Markets analyst downgraded the food company to “Market Perform.” Tyson stock fell $2.25, or 3.6 percent, to $60.96 but is up 49 percent over the last 12 months.
METALS: Gold gained $4.50 to $1,247.40 an ounce. Silver rose 8 cents to $16.45 an ounce. Copper was little changed at $2.12 a pound.
OTHER ENERGY TRADING: Wholesale gasoline lost 2 cents to $1.59 a gallon. Heating oil gained 2 cents to $1.50 a gallon. Natural gas rose 7 cents, or 2.8 percent, to $2.47 per 1,000 cubic feet.
OVERSEAS: The FTSE 100 index of leading British shares jumped 1 percent as polls showed voters in the U.K. want the nation to leave the European Union. Britain will hold a referendum on membership in the 28-nation bloc on June 23 and campaigning is heating up. The British pound weakened based on the latest polls. Elsewhere Germany’s DAX rose 0.2 percent and France’s CAC 40 was little changed. Japan’s Nikkei 225 fell nearly 0.4 percent and Hong Kong’s Hang Seng added 0.4 percent.
CURRENCIES: The dollar rose to 107.39 yen from 106.68 yen. The euro inched up to $1.1372 from $1.1347.
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