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Stocks Dodge Oil Dilemma, End Higher As China-Names Rally

Stock wrestled to a positive finish Wednesday, overcoming an energy sector meltdown brought on by multiple global factors.

The Dow Jones industrial average and the S&P 500 climbed 0.2% apiece. The Nasdaq surged 0.4%, as NetEase (NTES), JD.com (JD) and American Airlines (AAL) led the Nasdaq 100 with gains of more than 2% each. Apple (AAPL) and the FANG stocks also had their say, with Apple up 0.6% and Amazon.com (AMZN) rising 0.7%.

Preliminary data showed volume mixed, higher on the NYSE, lower on the Nasdaq, than end-of-day trade on Tuesday.

In a day of whirling global news and events, oil took center stage as a Platt's survey outlined a surprise production increase of more than a quarter-million barrels per day by the Organization of Petroleum Exporting Countries, followed by a weekly inventories report from the Energy Information Administration that showed a 3.3 million-barrel increase in U.S. supplies. That number was almost 8 million barrels above the American Petroleum Institute's estimate released Tuesday, which showed a 4.6 million decrease during the same week. That estimate had helped send oil prices up nearly 2% on Tuesday.

Oil was already being closely watched early Wednesday, as tensions rose in the Persian Gulf where Saudi Arabia, the United Arab Emirates and Bahrain had effectively blockaded Qatar, and after reports of multiple armed attacks on official buildings in Tehran, Iran, that reportedly left at least 12 dead. News reports said the Islamic State claimed responsibility for the Tehran attacks.

As a result, U.S.-based oil benchmarks led the declines, with West Texas Intermediate crude ending down nearly 5% to below $46 a barrel, its lowest mark since early May.

UnitedHealth Raises Dividend, NetEase Gets Price Target Hike

On the stock market, oil-related groups took six of the session's 10 worst losses among industries. Drilling, U.S. E&P and field services were hardest hit.

Airlines had one of the day's best performances, with Hawaiian Holdings (HA) surging 12% to break out above a 56.25 buy point. The owner of Hawaiian Airlines reported stronger-than-expected passenger traffic in May. Brazil-based Gol Intelligent Airlines (GOL) jumped 5% in weak trade.

Oil plays took nine of the 10 hardest falls among S&P 500 stocks. Newfield Exploration (NFX) and Helmerich & Payne (HP) each fell about 6%. Also among those tumbles was beer-maker Molson Brewing (TAP), which tanked 6.5%.

Near the top of the list, Intercontinental Exchange (ICE) swung up more than 3% in moderate trade. The move was enough to clear a 62.08 flat-base buy point, but volume was only 20% above average – not enough to qualify as a breakout. Volume can sometimes kick in a day or two after a stock passes a buy point, confirming a breakout after the fact.

Nike (NKE), UnitedHealth Group (UNH) and American Express (AXP) were among the Dow industrials to rise 1% or more. UnitedHealth hiked its quarterly dividend to 75 cents a share and Morgan Stanley initiated coverage on the stock with an overweight rating and a 202 price target.

Coca-Cola (KO) dropped to the bottom of the list, down 1%, pressured by a downgrade from BMO Capital Markets to market perform from outperform.

China-based stocks posted a strong session, with NetEase leading the Nasdaq 100 with a 3% gain in powerful trade. Standpoint Research trimmed the stock's rating to reduce, from buy, but also upped its price target to 360 from 345.

On the IBD 50 list, New Oriental Education & Technology (EDU) and TAL Education (TAL) led, up 9% and 5% respectively. New Oriental remained extended and working on its eighth-straight weekly gain. TAL is extended after a rebound from support at its 10-week moving average.

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