Energy shares lead Wall Street higher as earnings get into gear
By Lewis Krauskopf
(Reuters) - Wall Street gained on Tuesday, led by surging energy shares that were buttressed by rising oil prices, while Alcoa kicked off an expected tepid corporate earnings season.
All 10 S&P sectors were higher in afternoon trading. Energy shares <.SPNY> jumped 3 percent, with oil majors Exxon Mobil <XOM.N> and Chevron <CVX.N> giving two of the biggest boosts to the S&P 500.
Financials <.SPSY>, the worst performing group this year, rose 1.2 percent. JP Morgan <JPM.N> was set to report results on Wednesday, followed by other banks later in the week.
S&P 500 profits are expected to have fallen 7.8 percent in the first quarter, according to Thomson Reuters I/B/E/S.
Alcoa <AA.N> shares fell 3.2 percent on Tuesday after the metals company late on Monday reported a lower quarterly profit, with results hurt by low commodity prices.
"The market has been expecting earnings to be absolutely terrible and they are, but they’re not quite as terrible as everyone thought and things are looking better ahead," said Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts.
"When you combine not-as-bad today with the promise of a better tomorrow, that says that perhaps there’s more upside and the market is starting to react to that."
The Dow Jones industrial average <.DJI> was up 173.68 points, or 0.99 percent, to 17,730.09, the S&P 500 <.SPX> had gained 19.05 points, or 0.93 percent, to 2,061.04 and the Nasdaq Composite <.IXIC> had added 35.23 points, or 0.73 percent, to 4,868.63.
Wall Street's rocky start to 2016 was followed by a sharp rebound since mid-February and stocks are now slightly positive for 2016.
The stock market has taken its cues from the fluctuations in depressed oil prices for much of the past few months, although that correlation has weakened some in recent weeks.
Global oil prices hit four-month highs on Tuesday, hovering just under $45 a barrel after a report that top producers Russia and Saudi Arabia have agreed to freeze output ahead of a much-anticipated producers meeting on Sunday.
Global risks remain a concern. The International Monetary Fund cut its global growth forecast for the fourth time in the past year on Tuesday, citing China's slowdown and chronic weakness in advanced economies.
Juniper Networks <JNPR.N> sank 7.9 percent to $22.93. The network gear maker projected lower-than-expected quarterly profit and revenue.
Starbucks <SBUX.O> fell 2.8 percent to $59.23 after Deutsche Bank downgraded the stock to "hold" from "buy."
Advancing issues outnumbered declining ones on the NYSE by 2,408 to 564, for a 4.27-to-1 ratio on the upside; on the Nasdaq, 1,903 issues rose and 862 fell for a 2.21-to-1 ratio favoring advancers.
The S&P 500 posted 10 new 52-week highs and 4 new lows; the Nasdaq recorded 25 new highs and 22 new lows.
(Corrects paragraph 11 to show Brent crude at four-month high, not five-month high)
(Reporting by Lewis Krauskopf in New York; additional reporting by Yashaswini Swamynathan and Abhiram Nandakumar in Bengaluru; Editing by Anil D'Silva and Nick Zieminski)
