Investments, Trading Secrets, Weekly Market Outlook

Dow briefly tops 18K for first time since July

U.S. stocks traded higher Monday, with consumer discretionary and health care stocks among the top gainers, as oil prices pared most of their overnight losses.

All three major averages reversed an opening decline to hold higher, with the Dow Jones industrial average and S&P 500 near their highest levels of the year so far.

The Dow briefly added more than 100 points in midday trade to top the psychologically key 18,000 level for the first time in intraday trade since July 21, 2015. Walt Disney contributed the most to gains in the index, followed by Chevron and Home Depot.

Oil prices came well off lows, with Brent briefly turning higher and WTI off about 2 percent to trade near $40. Traders noted some support for crude, at least in the short term, from news that Kuwait significantly cut production due to an oil-worker strike.

On Sunday, producers failed to reach an output freeze agreement at a meeting in Doha, Qatar.

Energy recovered an initial 1 percent decline to trade 1.5 percent higher as the top S&P 500 performer in midday trade.

“I think a lot of people were short some energy names going into Doha and they’re scrambling to cover,” said Jeremy Klein, chief market strategist at FBN Securities.

Health care and consumer discretionary were also among the top S&P performers as most sectors advanced in afternoon trade.

Shares of Walt Disney rose 2.5 percent to contribute the most the gains in the Dow, while Apple contributed the most to declines.

Pivotal Research upgraded Disney to “buy” from “hold,” saying many investor concerns are already priced into the stock. Separately, Disney’s “The Jungle Book” won the weekend box office by a wide margin, taking in $103.6 million in North American ticket sales and ranking as the second best ever April opening.

Hasbro traded more than 5 percent higher after beating estimates by 14 cents with quarterly profit of 38 cents per share, while revenue topped analyst forecasts by a wide margin as well. Hasbro’s results were powered by toys based on “Star Wars: The Force Awakens.” 

Shares of Hasbro and Mattel both hit fresh 52-week highs in morning trade.

“I think the equity market’s holding up pretty well considering oil is as down as much as it is,” said Jack Ablin, chief investment officer at BMO Private Bank.

“Once a bottom was put in oil in the 20s then the uncertainty surrounding oil and its impact surrounding oil and the financial markets certainly dissipated,” he said.

Oil prices held well off session lows, with U.S. crude oil futures for May delivery trading 2 percent lower above $39 a barrel as of 2:18 p.m. ET.

Overnight, WTI dropped more than 6.5 percent after no agreement emerged from the Sunday meeting of major oil producers in Doha, Qatar.

Also on Sunday, Kuwait reduced its crude oil output and refining production as part of an emergency plan to help the OPEC member deal with the largest petroleum workers’ strike in years, Reuters said. The news wire also cited a tweet from Kuwait Oil Company’s account that said the company had cut crude output to 1.1 million barrels per day from its normal production level of about 3 million barrels a day.

An official from state refiner Kuwait National Petroleum told Al-Arabiya television on Monday the country plans to increase crude oil production to normal levels, Reuters reported.

“Although oil is key, earnings will be the focus this week,” said Peter Coleman, head trader at Convergex, noting that oil would not be as significant a drag on stocks as long as it held above $35 a barrel.

“Earnings were down but they beat expectations,” he said.

Morgan Stanley posted better-than-expected earnings per share with revenue coming in roughly in line. IBM and Netflix are set to report after the close.

New York Fed President William Dudley said Monday morning that the normalization of monetary policy will likely remain “gradual and cautious” due to “significant uncertainties” and continued “headwinds to growth” from the financial crisis.

Treasury yields turned higher, with the 2-year yield near 0.75 percent and the 10-year yield around 1.78 percent.

The U.S. dollar index traded slightly lower, with the euro near $1.132 and the yen around 108.7 yen against the greenback as of 1:34 p.m. ET.

The NAHB housing index was reported ahead of schedule, with the housing market index at 58 in April, unchanged from March, Reuters said.

DJIADow Jones Industrial Average17987.4890.020.50%
S&P 500S&P 500 Index2092.8412.110.58%
NASDAQNasdaq Composite Index4956.8018.580.38%

European stocks closed 0.4 percent higher.

Asian stocks closed lower, with the Nikkei 225 off 3.4 percent and the Shanghai composite ending 1.4 percent lower.

In afternoon trade, the Dow Jones industrial average traded up 89 points, or 0.5 percent, at 17,986, with Disney leading advancers and Apple the greatest decliner.

The S&P 500 rose 10 points, or 0.5 percent, to 2,091, with energy leading all sectors higher.

The Nasdaq composite rose 18 points, or 0.38 percent, to 4,957.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.6.

About seven stocks advanced for every three decliners on the New York Stock Exchange, with an exchange volume of 469 million and a composite volume of 2.096 billion in afternoon trade.

U.S. crude oil futures for May delivery declined 85 cents at $39.51 a barrel on the New York Mercantile Exchange.

Gold futures for June delivery settled 40 cents higher at $1,235 an ounce.