
S&P 500, Dow Eye Record Close as Crude Oil Rallies
The S&P 500 and Dow Jones Industrial Average were on track to close at record highs Tuesday as a rally in crude oil boosted the energy sector.
The S&P 500 was up 0.78%, just below its intraday record of 2,155 achieved earlier in the day. The Dow climbed 0.68%, just shy of its own intraday record of 18,363. The Nasdaq added 0.77% to erase all 2016 losses.
For the first time in 14 months, the S&P 500 closed at a record high on Monday, building upon major gains enjoyed at the end of last week. Stocks had been lifted by a better-than-expected U.S. jobs report for June which brought relief over the state of the U.S. economy.
A crude rally supported Wall Street's gains. Oil jumped after a report from the Organization of the Petroleum Exporting Countries forecast an increase in demand and a decline in production in 2017. The group, which accounts for around a third of the world's supply, expects demand for its crude to increase to 33 million barrels a day next year.
West Texas Intermediate crude oil closed 4.6% higher at $46.80 a barrel on Tuesday, a nearly one-week high.
"Petroleum prices have turned higher in Tuesday trade supported by further gains in the equity markets, a softer U.S. dollar, and an OPEC forecast for the market to rebalance in 2017," said Timothy Evans, energy futures analyst at Citi. "While we will credit the market with achieving a balance for 2017 as a significant improvement over the past two years of surplus, we note this scenario also suggests it will be 2018 before we see global inventories trending lower."
The energy sector was the best performer on Wall Street Tuesday. Major oilers including Exxon Mobil (XOM) - Get Report , Chevron (CVX) - Get Report , Halliburton (HAL) - Get Report and ConocoPhillips (COP) - Get Report were all higher, while the Energy Select Sector SPDR ETF (XLE) - Get Report added nearly 3%.
Alcoa (AA) - Get Report reported earnings Monday afternoon, unofficially kicking off the earnings season. The aluminum producer beat earnings and revenue estimates in its second quarter even as sales dropped. The company earned an adjusted 15 cents a share, above expectations of 9 cents. Revenue slid 10% to $5.3 billion but came in higher than forecasts of $5.2 billion. Alcoa shares were up nearly 6%.
The second-quarter earnings season is likely to be another quarter in decline, pulling S&P 500 companies into their longest earnings recession since the start of the financial crisis. U.S.-listed companies have seen profits decline for five straight quarters, according to FactSet. But this might be the beginning of the end to this losing streak.
"The best thing to say about this streak, the longest since 2008, is that the drop will likely confirm that the 5% year-over-year decline in the first quarter of 2016 marked a trough," said Burt White, chief investment officer for LPL Financial. "Signs are pointing to better times ahead."
Job openings in May fell to their lowest level of 2016, according to the Labor Department. Openings fell by 345,000 to a seasonally adjusted 5.5 million, down from a record high set in April. The Job Openings and Labor Turnover Survey showed the hiring rate steady, at 3.5%.
Tesla (TSLA) - Get Report was on watch after the Securities and Exchange Commission reportedly opened an investigation into its failure to disclose a fatal accident involving one of its vehicles. A crash in Florida in early May was likely the result of the vehicle's autopilot feature, which failed to recognize ongoing traffic. Tesla said in a statement it has not received word from the SEC over an investigation.
AMC Entertainment (AMC) - Get Report announced Tuesday that it has agreed to acquire London-based Odeon& UCI Cinemas from private-equity firm Terra Firma. Odeon has 242 theaters and 2,236 screens, making it the largest theater chain in the U.K., Ireland, Italy and Spain. The deal, which is worth 921 million pounds, is expected to close by the end of the year.
Xerox (XRX) - Get Report jumped more than 2% on reports it is pursuing a deal with R.R Donnelley & Sons (RRD) - Get Report . The printing company would reportedly acquire R.R. Donnelley and then split it among its business units ahead of a planned split into two publicly traded entities. Xerox intends to split its office equipment unit from its services offerings.
Seagate Technology (STX) - Get Report rocketed higher after announcing plans to cut 14% of its workforce by the end of 2017. The job cuts amount to roughly 6,500 positions.
Chesapeake Energy (CHK) - Get Report surged after Piper Jaffray boosted its rating to neutral from underweight. Analysts said its risk of default was lower after completing nearly $1 billion worth of divestitures.









