A largely-unexpected production freeze agreement between major oil-producing countries sent stocks and crude into rally mode late in the session.
Reports of an agreement sent stocks into the green, shaking off a choppy morning, and solidified commodities gains. The S&P 500 was up 0.53%, the Dow Jones Industrial Average added 0.60%, and the Nasdaq gained 0.24%.
Organization of Petroleum Exporting Countries have reached some form of a production freeze agreement following a three-day energy meeting in Algeria, according to Reuters. OPEC would limit oil production to 32.5 million barrels a day in November. Members had shown reluctance to agree to any deal and cede market share.
The latest reading on oil inventories in the U.S. showed a decline for the fourth week in a row. The U.S. Energy Administration reported that domestic crude stocks fell by 1.9 million barrels in the past week. A separate reading from the American Petroleum Institute a day earlier had shown a much smaller drop. Consensus was for a build of three million barrels.
West Texas Intermediate crude oil closed 4.52% higher at $46.69 a barrel on Wednesday. (Bob Byrne of Real Money runs down the latest charts for oil, natural gas, gold and the S&P 500 here.)
Wall Street pivoted to debate the chances of a near-term hike in interest rates again. In testimony to the House of Representatives, Federal Reserve Chair Janet Yellen noted that accommodative policy would need to be removed, though "probably not that much," if the economy continues to improve as expected. As usual, Yellen said there was no fixed timetable for a rate hike, though comments from the Fed last week suggested a December increase is a very real possibility.
Christine Lagarde, the International Monetary Fund's managing director, was not quite as confident in the U.S. economy's recovery. Lagarde said in prepared remarks to Northwestern University that the institution's 2016 growth forecasts for the U.S. would need to be reduced again. The IMF lowered its U.S. growth outlook to 2.2% from 2.4% two months ago. The IMF will release its updated outlook at its annual meeting next week.
Yellen told the House Financial Services Committee Wednesday that the top U.S. banks have "strengthened considerably" since the apex of the financial crisis. Yellen outlined plans for the Fed to work to ensure larger capital requirements for big banks to weather crises when they arise. The eight largest banks in the U.S. have doubled common equity capital to $800 billion since 2008, Yellen noted.
"We must carefully monitor the impact of the regulatory changes we have made and remain vigilant regarding the potential emergence of new risks to financial stability," said Yellen.
Technical analyst Helene Meisler of Real Money, our sister site for active traders, wrote that the S&P 500's rally Tuesday came on "awful" breadth, adding that "there is no way to spin that bullishly." Click here to check out her latest technical take.
Durable goods orders came in flat in August, according to the U.S. Census Bureau, far better than an expected decline of 1.9%. Excluding transportation, U.S. orders fell 0.4%. Orders for long-lasting goods were revised lower in July, showing growth of 3.6% from 4.4%. August's flat reading pointed to continued weakness in the manufacturing space as a strong U.S. dollar and soft global demand still impede activity.
Viacom (VIA.B) rose 3% on reports CBS and the media company are moving closer to a merger agreement. Sumner Redstone's National Amusements, the controlling shareholder of both companies, has reportedly been orchestrating negotiations between the boards.
German officials have quickly denied a report that the government would help Deutsche Bank (DB) - Get Report in the case it cannot bankroll its recent litigation issues. Earlier reports indicated the bank would be allowed to sell its assets to other lenders at prices that would fund some of the charges and that the German government might even take a 25% stake in the company.
Earlier this month, the U.S. Justice Department levied a $14 billion fine at Deutsche Bank following an investigation into its residential mortgage-backed securities.
BlackBerry (BBRY) jumped 5% following a better-than-expected quarter. Adjusted earnings were breakeven, better than an expected loss of 5 cents a share. The tech company expects full-year earnings of breakeven to a loss of 5 cents a share, far narrower than consensus of a loss of 16 cents a share. CEO John Chen said the company is "reaching an inflection point with our strategy."
Nike (NKE) - Get Report slid nearly 4% after quarterly future orders fell short of analysts' estimates. The measure, an indicator of sales scheduled through to January, rose 5% and slowed from 8% growth in the previous quarter. Overall revenue rose 7.7% over Nike's August-ended quarter.
Wells Fargo (WFC) - Get Report rose by less than 1% after California State Treasurer John Chiang implemented a number of sanctions against the bank as punishment for unethical sales practices. The year-long sanctions suspend Wells Fargo from certain activities, including underwriting state debt.
Earlier, Wells Fargo cancelled a total of $60 million in stock awards to CEO John Stumpf and retiring consumer banking chief Carrie Tolstedt. Wells Fargo has been under scrutiny since the scandal broke that workers had created up to two million unauthorized customer accounts to meet sales targets. The bank has since agreed to a $185 million settlement with government officials over a sales fraud investigation.