Energy companies and banks are leading stocks higher in midday trading on Wall Street. A jump in the price of crude oil sent oil and gas companies higher, while banks benefited from rising bond yields, which will help them make more money from lending by allowing them to raise interest rates. Phone and real estate companies fell as their appeal to investors seeking income faded.
THE SCORE: The Dow Jones industrial average rose 118 points, or 0.7 percent, to 18,286 as of 11:33 a.m. Eastern time. The Standard & Poor’s 500 index gained 10 points, or 0.5 percent, to 2,161. The Nasdaq composite climbed 33 points, or 0.6 percent, to 5,323.
GUSHER: The price of U.S. benchmark crude rose 2.4 percent to $49.85 after the U.S. government said energy stockpiles shrank last week, surprising analysts, who had expected inventories to grow. Investors have been pushing the crude sharply higher since OPEC announced a preliminary deal last week that would limit production, and is up now from a February low of $26. Brent crude, the international standard, climbed 2 percent to $51.85 a barrel in London.
BEER BOUNCE: Constellation Brands rose $2.69, or 1.6 percent, to $168.54 after it reported strong sales of beers like Corona and Modelo in its latest quarter. It raised its projections for sales growth for its beer business.
SERVICE SURGE: U.S. services companies grew last month at the fastest pace in nearly a year, another positive signal for the U.S. economy. The Institute for Supply Management said that its services index jumped to 57.1 in September, the highest point since October last year. That could signal that the Federal Reserve is more likely to raise rates from super-low levels this year.
YIELD JUMP: U.S. government bond prices fell on the latest bullish news on the economy. The yield on the 10-year Treasury note rose to 1.72 percent from 1.69 percent. It’s up a tenth of a percentage point since Monday, a big move in the bond market. In addition to selling phone stocks, investors dumped real estate companies and utilities, sending those sectors down 2.8 percent and 0.5 percent, respectively. Those high-dividend stocks are also sought out by investors seeking income when bond yields are low.
THE QUOTE: Instead of stocks trading on corporate earnings, “every move is being based on the Federal Reserve policy all the time,” said Bob Phillips, managing principal of Spectrum Management Group. “Nothing is attached to fundamentals.”
EUROPE DOWN: Britain’s FTSE 100 lost 0.6 percent to 7,047 and France’s CA 40 retreated 0.2 percent. Germany’s DAX dropped 0.2 percent.
ASIA’S DAY: South Korea’s Kospi finished 0.1 percent lower and Hong Kong’s Hang Seng index gained 0.4 percent. Japan’s Nikkei 225 finished 0.5 percent higher.
CURRENCIES: The euro rose to $1.1208 from $1.1197 and the dollar rose to 103.47 yen from 102.81.