US stocks rallied, with the Standard & Poor’s 500 Index closing at a six-week high, amid broad gains as a surge in oil prices helped lessen concern that a slowdown in global growth is deepening.
The S&P 500 rose 1.4 percent to 1,945.28 at 4 p.m. in New York, the highest since Jan. 6 following its strongest weekly advance since November.
The benchmark is less than seven points below its average price during the past 50 days, after falling below that level on Dec. 30.
“Markets now are at least maybe coming to a recognition that while it’s not going to be a great economic outlook, it’s probably not going to be terrible, either,” said Greg Woodard, a senior analyst and strategist at Fairport, New York-based Manning & Napier Inc which oversees about $46 billion.”
The wheels of the economy are certainly not falling off in the U.S.”
Oil rose amid speculation that a production freeze by some OPEC members and Russia could eventually help to abate the surplus.
Russia said talks on an output freeze will be done by March 1, while Nigeria said some countries should have production capped at higher levels. West Texas Intermediate crude futures soared 6.2 percent, briefly rising above $32 a barrel.
Equities showed little indication Monday of the anxiety over the pace of global growth or the impact of persistently low oil prices that helped drive the S&P 500 to a 22-month low on Feb. 11.
Signs that crude prices are stabilizing, and speculation that China’s slowdown isn’t as bad as feared have helped the gauge cut its 2016 decline in half in six trading sessions.
Some of the year’s most beaten-down shares — including banks, semiconductor, auto and retailer stocks — have paced the rebound
Concern that some energy producers will have trouble staying solvent amid low oil prices has put pressure on lenders this year, while investors have also been worried that weakness in China’s economy could spread. The main U.S. equity benchmark is still down 8.7 percent from a May record and has slipped 4.8 percent this year.
“I think it would be very helpful for oil to stabilize at least,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland. “It doesn’t necessary have to start climbing back. A rally, even if it’s fairly short, will definitely help to shore up prices in the equity market in the short term.”
With the earnings season approaching an end, about three- quarters of results from S&P 500 firms exceeded profit projections, while less than half have topped sales forecasts Transocean and Apache Corp re among those reporting this week. Analysts estimate earnings at S&P 500 companies fell 4.2 percent in the fourth quarter, compared with Jan. 15 predictions for a 7 percent slump.
“This is a continued recovery from the big correction we’ve encountered,” said Eric Green, director of research and senior managing partner at Penn Capital, which has more than $6 billion under management in Philadelphia.
“Earnings are coming in a little better than low expectations, valuations in the market have become attractive and sentiment is very, very negative. All those things along with the fact that you’re getting a bounce back in oil prices are contributing to the upside.”
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