Published: Sat, May 12, 2018
Money | By Armando Alvarado

Futures rise on oil rally after US exits Iran deal

Futures rise on oil rally after US exits Iran deal

Energy stocks rallied earlier in the session due to troubles for Venezuelan oil company PDVSA and by the looming decision on whether the United States will re-impose sanctions on Iran.

The only sectors that fell were safe-play stocks like utilities and phone companies.

"The areas of strength that you're seeing today are encouraging", said Willie Delwiche, investment strategist at Baird.

At 11:24 a.m. EDT the Dow Jones Industrial Average.DJI was up 18.37 points, or 0.08 percent, at 24,378.58, the S&P 500.SPX was up 7.16 points, or 0.27 percent, at 2,679.08 and the Nasdaq Composite.IXIC was up 9.96 points, or 0.14 percent, at 7,276.87. The gain nudged the benchmark index into positive territory for the year. The Nasdaq composite increased 73 points, or 1 percent, to 7,339.

The Russell 2000 index of smaller-company stocks picked up 7.44 points, or 0.5 percent, to 1,586.39.

The indexes moved higher for much of the morning as investors weighed the latest corporate quarterly results.

USA corporates have performed strongly in the first quarter, with almost 80 per cent of the 400 S&P 500 companies that have reported so far topping profit estimates, according to Thomson Reuters I/B/E/S.

Trade Desk vaulted 43.4 percent to $75.61 after the digital advertising platform company raised its annual forecasts after a strong first quarter.

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Energy stocks also rose as the price of crude oil climbed back above $70 a barrel, a day after the US moved to withdraw from a nuclear accord with Iran.

"We've had some noise from Iran, but some of the underlying [oil market] trends are probably still intact in terms of a recovering economy, high demand and higher inflation", Delwiche said.

That had raised the expectations of higher interest rates, pushing the USA 10-year Treasury yield to a two-week high and above the key 3 percent level. Benchmark U.S. crude oil climbed $2, or 2.9 percent, to $71.06 per barrel in NY.

The pickup in oil prices sent energy stocks higher. Occidental Petroleum rose 5.4 percent to $82.40.

Bond prices fell. The yield on the 10-year Treasury rose to 2.97 percent.

Technology stocks and banks also rose. Financial sector stocks rose. Google's parent company, Alphabet, rose 2.9 percent and Bank of America also rose 2.6 percent.

Walmart dropped 3.6 percent after it acquired a controlling stake in Indian e-commerce firm Flipkart for about $16 billion, the USA retailer's biggest foreign investment. The move is Walmart's biggest acquisition yet and reflects the retailer's focus on growth opportunities as it tries to narrow the gap with Amazon.com.

Gold fell $1.60 to $1,320.70 an ounce.

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