Dow rallies as oil keeps on climbing
US MARKETS booked gains yesterday as the financial sector rebounded and energy and materials stocks became the subject of renewed buying activity.
Oil prices were a major contributor, with crude futures closing up $2.69 at $68.81 per barrel – a seven-month closing high helped by Goldman Sach’s decision to boost its target price for the commodity to $75 per barrel.
Chevron and oil major Exxon Mobil both put in gains above 1 per cent, leading markets higher during the afternoon’s trading.
Hopes the recent rises in the oil price are part of a longer-term trend became more embedded yesterday, with futures as far out as December 2010 seeing heavy trading volume.
In the financial sector KeyCorp, the banking solutions group, gained almost 20 per cent after RBC Capital Markets named it a “top pick” and said its share price had been factoring in bigger risks on loan losses than are actually present.
RBC was bullish on the entire banking sector last night, stating it believes the darker days of the financial crisis are now passed.
US regional bank SunTrust was up 4.5 per cent as markets closed last night, while PNC Financial Services added 6.9 per cent amid the sector cheer. Fifth Third Bancorp saw its shares put in a healthy 6.6 per cent gain.
While major markets saw mixed early trading, they were buoyed by better-than-expected unemployment benefit claims numbers – a relied-upon predictor for today’s jobless report.
The Dow Jones Industrial Average gained 74.96 points, booking a 0.9 per cent gain to 8750.24. The Nasdaq Composite index added 24.10 points to 1850.02 and the Standard & Poor’s 500 index put in a 10.70 gain, up 1.2 per cent to 942.46. The Dow has now risen in five of its last six sessions.
In addition to the promising jobless benefits statistics out yesterday, US markets were buoyed by news productivity rose 1.6 per cent in the first quarter as US firms slashed headcounts.
The US Labor Department had reported the number of claims for jobless benefits dropped after hitting a new record in January.