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US stocks advance as energy producers rebound with crude oil
[NEW YORK] US stocks advanced, after the first gain in three days for the S&P 500 Index, while energy producers rebounded with oil prices as Opec members meet Wednesday.
The S&P 500 added 0.2 per cent to 2,163.56 at 9:34 am in New York. The gauge has hovered between its average prices during the past 50 and 100 days for 12 of the past 13 sessions, the most since 1992, according to data compiled by Bloomberg.
"While the correlation between oil and stocks has loosened, it's still dictated some trading this week," said Matt Maley, an equity strategist in New York at Miller Tabak & Co LLC. "We're about to head back into earnings season, when we'll see if stocks can get the pick-up the market's been hoping for."
Oil halted losses after Saudi Arabia signaled it may compromise with regional rival Iran on a future output agreement, even as none is expected at Wednesday's meeting in Algiers. Speculation on whether a deal would be reached kept crude near US$45 a barrel in the past week and sent energy shares lower.
While stocks gained last week after the Federal Reserve's decision to keep rates unchanged, the S&P 500 is still is still down 0.5 per cent in September through Tuesday, on track for its biggest monthly decline since January. The index closed yesterday 1.4 per cent below a record set on Aug. 15, and trades at 18.4 times forecast earnings, the highest since 2002.
Meanwhile, investors are looking for signs that the economy is strengthening and awaiting the next earnings season, which will kick off in about two weeks. A report today showed orders for durable goods were little changed in August, while shipments of capital equipment declined for a fourth straight month, indicating lingering weakness in manufacturing. A revised reading on second-quarter growth, pending home sales as well as measures of personal income and spending are due later this week.
Fed Chair Janet Yellen will testify today before the House Financial Services Committee on bank supervision and regulation. Three other Fed officials are also scheduled to deliver remarks before markets close.
"Investors are slowly regaining confidence after a weaker couple of weeks, but I see more volatility ahead, at least until the November vote," said Heinz-Gerd Sonnenschein, an equity strategist at Deutsche Postbank AG in Bonn, Germany. His firm manages about 149 billion euros.