Dow up triple digits; energy rises 1% as drillers jump – CNBC

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U.S. stocks traded higher Wednesday after posting their best day since March as investors eyed oil prices and overseas news.

“At the margin if you can get a few bits of good news you can get people to stop abandoning stocks,” said Bruce McCain, chief investment strategist at Key Private Bank.

European stocks again set a positive tone for the U.S. market open, with the German DAX closing 1.5 percent higher. Overnight, the euro zone gave Greece its firmest offer yet of debt relief in what finance ministers called a breakthrough deal that won a provisional commitment from the IMF to return to taking part in the bailout for Athens, heartening investors, Reuters said.

The Dow Jones industrial average held about 150 points higher, with Goldman Sachs contributing the most to gains.

Materials topped energy and financials to lead S&P 500 advancers in late-morning trade. The oil and gas drilling sub-sector traded more than 4 percent higher.

Overnight, St. Louis Fed President James Bullard told CNBC that a summer rate hike isn’t set in stone, but the labor data is “probably the strongest argument for going ahead.”

Minneapolis Fed President Neel Kashkari said in a Reuters report that negative interest rates would only be a last resort for the Fed.

Dallas Fed President Rob Kaplan is also scheduled to speak Wednesday.

“Yesterday the supposed catalyst was the poll in the U.K. … Today the talk and chatter is the world economy and the world markets are pricing in and becoming comfortable with a rise in rates, either in June or July,” said Peter Coleman, head trader at Convergex. “My personal opinion is it’s a trading move because it’s a very light volume week with not a lot of news out.”

“(You’ve) got a lot of professional traders pushing the markets up here for a short-term trade,” he said.

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Shares of Transocean, Southwestern Energy, and Chesapeake traded more than 7 percent higher.

U.S. crude oil futures were last about 1.5 percent higher near $49.30 a barrel after weekly crude inventories from the EIA showed a drawdown of 4.23 million barrels.

Earlier, oil topped $49 a barrel to hit fresh highs for the year so far. WTI last traded above $50 a barrel in mid-October.

American Petroleum Institute data released late Tuesday showed U.S. crude stocks fell by more than 5 million barrels last week, double analyst expectations, while gasoline inventories increased and distillate stocks drew, Reuters said.

Lance Roberts, chief investment strategist at Clarity Financial, said the technical backdrop for stocks has improved, but “we really need to see some follow-through by the end of the week.”

In economic news, the Markit Flash U.S. services PMI for May was 51.2, down from 52.8 in April and well below the long-run survey average of 55.6, Markit said.

Treasury yields were lower, with the 2-year yield near 0.91 percent and the 10-year yield around 1.85 percent. Earlier, the 2-year yield touch 0.938 percent, its highest since mid-March.

The Treasury auctioned $34 billion in 5-year notes at a high yield of 1.395 percent.

The U.S. dollar index traded a touch lower, with the euro near $1.115 and the yen near 110.2 yen against the greenback as of 10:56 a.m. ET.

In other economic news, the U.S. advance April goods trade deficit was $57.53 billion, the U.S. Department of Commerce said.

The Federal Housing Finance Agency House Price Index rose 0.7 percent in March from the prior month.

Total mortgage application volume increased 2.3 percent for the week on a seasonally adjusted basis, a nearly 24 percent rise year-over-year, according to the Mortgage Bankers Association.

Asian stocks closed mostly higher, although Shanghai was mildly lower. The central bank fixed the yuan at its softest midpoint against the dollar since March 2011, Reuters said.

Shares of Alibaba fell more than 5 percent in midday trade after the China-based e-commerce firm said the Securities Exchange Commission was looking into its accounting practices.

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In early afternoon trade, the Dow Jones industrial average gained 157 points, or 0.89 percent, to 17,863, with Goldman Sachs leading advancers and Nike the greatest decliner.

The S&P 500 climbed 17 points, or 0.83 percent, to 2,093, with energy leading nine sectors higher and utilities the only decliner.

The Nasdaq composite gained 43 points, or 0.88 percent, to 4,903.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded lower near 14.2.

About three stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 456 million and a composite volume of nearly nearly 2.2 billion in early afternoon trade.

U.S. crude oil futures for July delivery gained 71 cents to $49.33 a barrel on the New York Mercantile Exchange.

Gold futures for June delivery fell $5.50 to $1,223.70 an ounce as of 1:25 p.m. ET.

Reuters contributed to this report.

On tap this week:

Wednesday

Earnings: HP, NetApp, PVH, Guess, Lionsgate, Popeyes Louisiana Kitchen, Pure Storage

1:30 p.m. Dallas Fed President Rob Kaplan

Thursday

Earnings: Dollar General, Signet Jewelers, Abercrombie & Fitch, Chico’s, Toronto-Dominion Bank, Palo Alto Networks, GameStop, Splunk

6:10 a.m. St. Louis Fed President James Bullard in Singapore

8:30 a.m. Initial claims

8:30 a.m. Durable goods

10 a.m. Pending home sales

12:15 p.m. Fed Gov. Jerome Powell

1 p.m. $28 billion seven-year note auction

Friday

Earnings: JA Solar

8:30 a.m. Real GDP Q1 (second)

10 a.m. Consumer sentiment

1:15 p.m. Fed Chair Janet Yellen receives award, in Q&A at Harvard

*Planner subject to change.