U.S. stocks hovered at session highs by Wednesday afternoon as crude oil bounced higher and inspired a rally in the energy sector.
The S&P 500 was up 0.91%, the Dow Jones Industrial Average rose 0.72%, or 150 points, and the Nasdaq gained 0.58%.
Crude oil regained a level above $37 a barrel after the Energy Information Administration reported an unexpected drop in crude inventories in the U.S. The weekly read on stocks showed crude inventories decline by 5.9 million barrels in the week ended Dec. 18.
Prices were already higher after the Organization of Petroleum Exporting Countries predicted its basket of crudes would increase to $70 a barrel in 2020 and $95 a barrel in 2040. West Texas Intermediate climbed 3.8% to $37.50 a barrel.
"The impact of the recent oil price decline on demand is most visible in the short term," Secretary-General Abdullah al-Badri wrote in the report.
The energy sector was the best performer on markets Wednesday. Major oilers including Exxon Mobil (XOM - Get Report) , Chevron (CVX - Get Report) , Kinder Morgan (KMI - Get Report) , Halliburton (HAL - Get Report) , and BP (BP - Get Report) moved higher, while the Energy Select Sector SPDR ETF (XLE - Get Report) climbed 3.7%.
New home sales in the U.S. rose 4.3% in November to a seasonally adjusted annual rate of 490,000, according to the Commerce Department. The reading reached its highest level in three months, driven by a 20.5% gain in the West and 4.5% increase in the South. Median prices climbed 6.3% to $305,000.
Durable goods orders were unchanged in November, beating estimates of a 0.5% contraction. Excluding transportation, durable orders fell 0.1%. Core orders have fallen 1.8% over the past 12 months.
Consumer spending in the U.S. rose in November as American shoppers began their holiday season over the Black Friday weekend. Spending increased 0.3%, according to the Commerce Department. The release had inadvertently been released more than 12 hours ahead of schedule.
"Consumers appear increasingly willing to ramp up purchases of goods and services near the end of the year," wrote Lindsey Piegza, chief economist at Stifel, in a note. "For the [Federal Reserve], however, this morning's report comes as a double edged sword ... Inflation remains sluggishly low offering little confidence that prices are trending back towards the Committee's longer term objective of 2%.
The final University of Michigan Sentiment Index for December rose to 92.6 from 91.3. Estimates called for the index to rise to 92.0.
Wednesday is the last full day of trading before the Christmas break and volume is expected to be lower than normal. Wall Street will close at 1 p.m. EST on Thursday for Christmas Eve and be closed on Friday for Christmas.
Apple (AAPL - Get Report) shares were up 0.9% after FBR & Co. analysts cut their price target and expectations for iPhone shipments. The firm said recent data showed weaker demand. Analyst Daniel Ives retained his "outperform" rating, but his stock price target was reduced to $150 from $175.
Disney (DIS - Get Report) is reportedly looking to exit Fusion, a joint venture cable network with Univision. The millennials-aimed network has struggled to find an audience since launching two years ago. Disney is looking to exit the venture by the end of the year, according to The Wall Street Journal.
Micron Technology (MU - Get Report) fell 4.7% after reporting weaker revenue in its recent quarter. The semiconductor company suffered from lower prices on softer demand for chips. Micron earned 24 cents a share, a penny above estimates.
Amazon (AMZN - Get Report) is reportedly looking to become less reliant on United Parcel Service as it faces higher costs and increased volume, according to the Journal. Previous reports suggested Amazon was looking to lease 20 Boeing jets to satisfy delivery demand.
Bed, Bath & Beyond (BBBY - Get Report) fell more than 4% after cutting quarterly guidance. The homewares retailer said it expects earnings of $1.07 to $1.10 a share, lower than a previous range of $1.14 to $1.21. The company said the revision was due to lower-than-expected sales.
Drugmaker Shire (SHPG) made a new acquisition offer for Baxalta International (BXLT) roughly in line with Baxalta's valuation expectations. Baxalta had rejected an all-stock offer from Shire in August, arguing it undervalued the company. A deal is likely in coming weeks, according to Reuters.
Chipotle (CMG - Get Report) shares remained under pressure after the Centers for Disease Control and Prevention said a new E.coli outbreak at the burrito chain appeared to have a "different, rare DNA fingerprint" of the disease. Shares dipped below $500 on Tuesday for the first time since mid-2014.