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US: Big oil rally propels stocks higher
[NEW YORK] Strong gains by petroleum producers and large banks propelled US stocks higher Tuesday as the market brushed aside a downcast growth forecast from the International Monetary Fund.
The Dow Jones Industrial Average gained 164.84 points (0.94 per cent) at 17,721.25.
The broad-based S&P 500 rose 19.73 (0.97 per cent) to 2,061.72, while the tech-rich Nasdaq Composite Index advanced 38.69 (0.80 per cent) to 4,872.09.
Midsized petroleum producers ConocoPhillips and Apache surged 5.5 per cent and 6.7 per cent, respectively, as oil prices advanced to 2016 highs on reports of an agreement between Saudi Arabia and Russia on freezing output.
Large banks including JPMorgan Chase and Bank of America were up about 2.0 per cent or more ahead of earnings reports later this week.
Higher oil prices have mitigated fears that the banks may have huge writeoffs due to oil-company defaults, said Michael James, managing director of equity trading at Wedbush Securities.
James said the IMF's forecast for slower global economic growth was expected.
"If you're trading based on the economic forecast from the IMF, your view is going to be lagging, not leading the market," he said.
Aluminum producer Alcoa fell 2.7 per cent as it announced plans to cut as many as 2,000 jobs following a big drop in first-quarter earnings.
But other equities tied to metals advanced, including United States Steel, which rose 1.7 per cent, and gold and copper producer Freeport-McMoRan, which jumped 6.9 per cent.
Dow member Caterpillar, which sells heavy machinery to the oil and mining industries, rose 2.0 per cent.
Technology shares were mostly up, with Apple climbing 1.3 per cent, Facebook 1.5 per cent and Netflix 4.2 per cent.
Chesapeake Energy surged 35.1 per cent after announcing that its lenders reaffirmed its borrowing base at US$4 billion and provided relief on lending covenants. Analysts said the announcement means Chesapeake can keep operating despite low commodity prices.
Juniper Networks, which sells routers and other network products and services, slumped 7.4 per cent as it warned that revenue and profits would lag prior forecasts in the first quarter. The company cited weaker-than-expected demand for some products.
Starbucks lost 2.3 per cent following a downgrade from Deutsche Bank, which voiced concerns about the coffee chain's high valuation and intensifying competition.