S&P 500 turns positive for year, oil up
Stocks rallied in afternoon trading Wednesday as a late-year rally sent the S&P 500 index back into positive territory for the year as Wall Street attempts a last-ditch effort to turn 2015 into a winning year.
Gains were led by surging energy stocks as oil prices jumped 4% on a drop in crude inventories.
While the official Santa Claus rally timeframe (the last five trading days of the year and the first two sessions of the new year) doesn't begin until Christmas Eve, the bulls have already kicked off a late-year push to transform a U.S. stock market now still in the red for the year into the black. (Normally, the S&P 500 posts an average gain of 1.5% during the 7-session Santa Claus rally, according to The Stock Trader's Almanac. The failure of stocks to rally during this time tends to precede bear markets or times when stocks could be purchased at lower prices later in the year.)
The Standard & Poor's 500 index ended up 25 points, or 1.2%, to 2064, jumping ahead of its its 2014 close of 2058.90. The Dow Jones industrial average finished up 185 points, or 1.1%, to 17,602 as it moved closer to its 2014 close of 17,823.07. The Nasdaq, already positive for the year, ended up 0.9% to 5046.
Heading into Wednesday's trading session, the Dow was down 2.3% in 2015 and the broader S&P 500 was off 1% for the year. The Dow is no down 1.2% from its 2014 close.
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The Dow has been very turbulent so far in December. The blue-chip stock gauge has endured closing point swings of 100 points or more in 14 of 16 December trading sessions, including eight straight. This week the Dow has posted triple-digit gains on Monday and Tuesday, trimming its year-to-date 2015 loss.
Much of the volatility has been generated by angst and uncertainty surrounding the Federal Reserve's first interest rate hike in nearly a decade, which came last week, as well as fears about the pace of future rate hikes next year. Persistent weakness in the price of oil, which fell below the key $35 per barrel level last week, has also been weighing on investor sentiment, as crashing oil prices has raised concerns that weakened U.S. suppliers could have trouble making bond payments.
This week, however, U.S.-produced crude has climbed back above $37 per barrel, and oil is gushing higher again Wednesday as crude supplies unexpectedly fell. In afternoon trading, U.S. crude was up 4% to $37.58 per barrel.
"Oil is up for the third session in a row," Bespoke Investment Group told clients, adding that U.S.-based crude prices are now at parity with its "European cousin Brent" crude. On Tuesday, the price of U.S. crude rose above that of Brent, a sign that the supply gut is a global issue.
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Investors have also been in a buying mood as the holiday season kicks in, a seasonal phenomenon that often occurs but is driven by factors that are hard to quantify.
In economic data released this morning before the opening bell, durable goods orders, or orders for big-ticket, long-lasting items like refrigerators and clothes dryers, were unchanged in November, which was better than the negative 0.6% reading expected by Wall Street economists. Personal spending in November also rose a solid 0.3%.
Consumer spending, personal income post gains in Nov.
In global markets, stocks were mixed in Asia, with Japan's Nikkei 225 falling 0.2%, Hong Kong's Hang Seng index rising 1% and the Shanghai composite in mainland China dipping 0.4%.
Stocks were sharply higher in Europe. The broad Stoxx Europe 600 index was up 2.6%.