Stock Indexes Drift Near Records as Oil Prices Jump

NEW YORK (AP) -
markets

U.S. stock indexes drifted around their record highs Monday after gains for energy stocks offset losses in other areas of the market. The price of crude rose after more oil-producing nations said they would cooperate in a plan to limit worldwide supplies.

KEEPING SCORE: The Standard & Poor’s 500 index was down 5 points, or 0.2 percent, to 2,254 as of 1:30 p.m. Eastern time. The Dow Jones Industrial Average added 13 points, or 0.1 percent, to 19,770. The Nasdaq composite fell 43 points, or 0.8 percent, to 5,402. All three closed at record highs on Friday. Two stocks fell for every one that rose on the New York Stock Exchange.

OIL’S WELL: Crude touched its highest price since the summer of 2015 after OPEC persuaded Russia, Mexico and nine other oil-producing nations to cut production for six months. Oil producers are looking to curb the worldwide glut, which sent the price of crude from $100 per barrel in the summer of 2014 to $27 in February and has ravaged the government finances of Saudi Arabia, Russia and others.

The price of U.S. benchmark crude rose $1.77, or 3.4 percent, to $53.27 a barrel in New York. The price of Brent crude, the international standard, rose $1.74, or 3.2 percent, to $56.07.

That helped to drive stocks higher across the oil-producing industry. ConocoPhillips rose 3 percent to $52.27, Exxon Mobil added 2.3 percent to $91.06 and Marathon Oil gained 2.1 percent to $18.64.

Energy stocks in the S&P 500 rose 1.1 percent. Energy and telecommunications stocks had the largest gains of the 11 sectors that make up the index.

YIELD OUTLOOK: Expectations of higher inflation in the economy, as well as stronger economic growth, have driven bond yields higher since Donald Trump’s surprise victory last month in the presidential election. Inflation is one of bond investors’ biggest fears, and they’re demanding higher yields in order to compensate for the perceived increase in risk.

The yield on the 10-year Treasury note rose above 2.50 percent to its highest level since autumn 2014 before settling back at 2.47 percent, where it sat on late Friday.

A RETURN TO CALM: The day’s modest moves come on the heels of a sudden rally that has driven the S&P 500 up 5 percent since last month’s election. Given all those gains in such a short amount of time, some investors are content to pull back and take a wait-and-see approach.

“Unless and until we see hard evidence of the economy picking up, we’re going to take these profits as a gift and pocket them,” says Rich Weiss, senior portfolio manager at American Century. Mutual funds that he oversees have been paring back their stock investments as the price tags for them have shot higher.

FED WATCH: Economists and investors are widely expecting the Federal Reserve to raise interest rates at its two-day policy meeting this week, which ends Wednesday. It would be the first increase since a year ago and just the second since 2006. The central bank has held interest rates at close to zero since the Great Recession in hopes of driving economic growth, though the low rates have also squeezed savers looking for income from bank accounts and bonds.

TRUMPED: Defense contractor Lockheed Martin fell $8.25, or 3.2 percent, to $251.28 after President-elect Trump tweeted that the cost of its F-35 fighter jet program “is out of control.” Last week, Trump criticized Boeing for the cost of the next Air Force One. That tweet briefly caused Boeing stock to drop, though it quickly turned back higher.

UNBUNDLED MEDIA: National Amusements, which controls both CBS and Viacom, said it’s no longer looking to combine the two. Viacom fell $2.98, or 7.7 percent, to $35.64. CBS was flat at $62.57.

ALEXION PLUNGES: Alexion Pharmaceuticals dropped $20.55, or 15.6 percent, to $111.52 after the company named an interim CEO and a new chief financial officer. The biopharmaceutical company is in the midst of an investigation into its sales practices.

EYE PAIN: Ophthotech plunged $32.95, or 85 percent, to $5.82. The biopharmaceutical company said its eye drug Fovista failed in two late-stage trials. Regeneron Pharmaceuticals, a competitor of Ophthotech, jumped 5.3 percent to $392.46.

AROUND THE WORLD: In Europe, Britain’s FTSE 100 was down 0.9 percent to 6,890, and Germany’s DAX shed 0.1 percent to 11,190. France’s CAC 40 was down 0.1 percent to 4,761. In Asia, Japan’s Nikkei 225 index rose 0.8 percent to 19,155, South Korea’s Kospi index inched up by 0.1 percent to 2,027 and Hong Kong’s Hang Seng fell 1.4 percent to 22,433.

COMMODITIES: Natural gas dropped 19 cents, or 5 percent, to $3.56 per 1,000 cubic feet, giving up some of its big gains from the past month. Natural gas, which often rises with expectations of colder temperatures and increased electricity usage, rose last week to its highest price in two years. Gold was up $5.10, or 0.4 percent, to $1.167 per ounce.

CURRENCIES: The dollar fell against many of its rivals, including the Japanese yen, British pound and Canadian dollar. The euro rose to $1.0609 from $1.0551 and the dollar fell to 115.15 yen from 115.23 yen.