Dow rises 285 points on investor optimism over debt ceiling extension

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US stocks were higher on Thursday as investors cheered the proposed debt ceiling extension until December.

The benchmark S&P 500 edged higher Thursday while the tech-heavy Nasdaq-100 rose. The Dow Jones Industrial Average was up nearly 300 points.

Here’s where US indexes stood at the 9:30 a.m. ET open on Thursday:

Worries were mounting as US legislators engaged in a tense standoff ahead of an October 18 deadline to raise the debt ceiling or default on the country’s debt.

On Wednesday, both parties made some headway after Senate Minority Leader Mitch McConnell said he was willing to offer a short-term debt ceiling extension until December.

Beyond the political drama, investors continue to anticipate when the Federal Reserve will begin tapering asset purchases amid inflationary pressures driven by a surge in commodity prices, particularly oil, and supply chain issues.

“We believe that inflation will continue to build up over the coming months, peaking close to 5% core CPI early next year before moving lower – an environment that resembles reflation more than stagflation,” Gargi Chaudhuri, head of iShares investment strategy, said in a note Thursday.

The yield on the benchmark 10-year Treasury note rose to 1.55 % Thursday from 1.524% Wednesday. Yields and prices move inversely.

US jobless claims totaled 326,000 last week, the Labor Department announced Thursday, coming in below the median forecast of 348,000 from economists surveyed by Bloomberg. It also snapped a three-week streak of gains.

In cryptocurrencies, bitcoin was 3.38% higher to $54,156 after breaching $55,000 on Wednesday when Securities and Exchange Chair Gary Gensler said he has no plans to ban crypto.

Meanwhile, dogecoin spin-off shiba inu is continuing its monster rally, having risen by over 300% in a week to a $12 billion valuation, according to Coinmarketcap. For the month, it gained around 350% in a month – roughly what bitcoin has gained in a year.

Natural gas prices fell 4% after Russian leaders including President Vladimir Putin offered to stabilize the European gas market by indicating that supply could increase through Ukraine. The trend spilled over to other commodities.

West Texas Intermediate crude oil slipped 0.71%, to $76.88 per barrel. Brent crude, oil’s international benchmark, fell 0.48%, to $80.69 per barrel.

Gold edged lower by 0.52%, to $1,755.04 per ounce.

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Oil prices jump to 7-year highs after OPEC+ agrees to stick to gradual production hikes

Smoke blows past oil wells at sunset on the eastern flank of the 16,000-plus-acre Guiberson fire, burning out of control for a second day as Red Flag warnings continue in southern California on September 23, 2009 near Moorpark, California.
Oil wells at near Moorpark, California.

  • Oil prices spiked after OPEC+ agreed to keep its existing schedule of gradual hikes in oil production.
  • WTI crude, the US oil benchmark, rose to its highest since 2014. Brent crude also gained.
  • OPEC+ ignored growing calls for opening the taps at a faster rate to bring down prices.
  • See more stories on Insider’s business page.

Oil prices spiked after OPEC+ on Monday agreed to keep its existing schedule of gradual hikes in oil production, adding to inflationary pressures engulfing global markets.

West Texas Intermediate crude, the US oil benchmark, rose as much as 3% to $78.13 per barrel, its highest since 2014. Brent crude, oil’s international benchmark, jumped as much as 3% to $81.77 per barrel.

The Organization of the Petroleum Exporting Countries as well as Russia and other non-member allies – also known as OPEC+ – ignored growing calls for opening the taps at a faster rate to bring down prices after oil rocketed to more than 50% this year.

Instead, the group “reconfirmed the production adjustment plan” to raise monthly overall production by 400,000 barrels per day in November, according to a statement released after the discussions.

In July, OPEC+ agreed to boost production by 400,000 barrels per day each month beginning August until at least April 2022, according to a statement. OPEC+ will meet again on November 4 to discuss the next monthly production quota.

The rapid ascent in oil prices comes amid a surge in demand for the commodity as major economies around the world simultaneously restarted after the devastation brought about by the pandemic lockdown. Bank of America last week said Brent crude could hit $100 a barrel for the first time since 2014, especially ahead of another cold winter.

Rather than increasing output by 400,000 barrels per day, adding 800,000 to the market in November would likely reflect the current market condition, according to Rob Thummel, portfolio manager at Tortoise, a firm that manages $8 billion in energy-linked assets.

But he acknowledged OPEC+ retains most of the leverage over the oil market. “OPEC+ holds all of the cards because they have available oil supply capacity that can be returned to the global markets in days.”

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S&P 500 hovers near record highs on continued economic optimism and Fed support

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US stock market investors are feeling optimistic about the economy.

  • US stocks rose with the S&P 500 hovering near record highs Friday as investors remain optimistic about the US economy.
  • The benchmark index on Thursday broke both its intraday and closing records.
  • The 10-year Treasury yield was around 1.455% Friday, in a sign that the market believes strong inflation will prove transitory
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US stocks rose on Friday, with the S&P 500 hovering near record highs as investors continue to remain optimistic about the US economy amid support from the Federal Reserve.

The benchmark index on Thursday broke both its intraday record and closing record, to finish the session at 4,239.18.

Tom Lee, managing partner and the head of research at Fundstrat Global Advisors, said the breakout to new highs was presaged by the upside breakout last week.

“Our base case of a surge in S&P 500 to 4,400 before mid-year 2021 remains intact,” Lee said in a note.

While Thursday’s data showed that US inflation surged more than expected in May, weekly jobless claims fell to a pandemic-era low.

The 10-year Treasury yield was trading around 1.455%, two basis points above its March low, in a sign that the market believes strong inflation will prove transitory, as the Federal Reserve has stated.

Here’s where US indexes stood at 9:30 a.m. open on Friday:

Bitcoin was trading at $37,421. The world’s most popular cryptocurrency climbed to a one-week high Thursday, hitting $38,000 as the cryptocurrency shrugged off renewed calls for tighter regulation.

Gold slipped by 0.57% to 1,887.18 per ounce. The precious metal lost some ground as the US dollar rose.

Oil prices fell. West Texas Intermediate crude edged lower by 0.07% to $70.24 per barrel. Brent crude, oil’s international benchmark, was down 0.07%, at $72.47 per barrel.

The International Energy Agency said on Friday that global oil demand is set to return to pre-pandemic levels by the end of 2022, but renewed COVID outbreaks and low vaccination levels in developing countries will make the recovery uneven.

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Energy-sector ETFs the only group to see $1 billion in weekly inflows as Suez Canal blockage and coming summer demand create favorable backdrop for oil

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Workers extracting oil from oil wells in the Permian Basin in Midland, Texas.

  • Energy-sector ETFs took in more than $1 billion in inflows this week, the only funds from a major sector to do so.
  • Energy inflows accompanied some recovery in oil prices after they dropped into correction territory.
  • Oil prices could stick to higher ground if a cargo ship stuck in the Suez Canal remains lodged there for weeks.
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Energy sector exchange-traded funds were the only group this week to add more than $1 billion in inflows as the cargo-ship blockage in the Suez Canal helped oil prices recover from their slump into correction territory.

Energy ETFs were a standout as flows to sector funds “fell prey to the general uncertainty” that ran through the week ended March 24, said EPFR, a subsidiary of Informa that provides fund flows and asset allocation data.

Four of the 11 major groups — commodities, telecoms, technology and financial sector funds — logged outflows for the week, according to a note issued Friday.

Investors pushed into energy sector funds “during a week when the blockage of the Suez Canal, the prospect of the North American spring and summer driving season and expectations of less investment in new supply helped the price of oil rebound from an earlier correction,” said Cameron Brandt, director of research at EPFR, in the note.

Brent oil, the international benchmark, and West Texas Intermediate crude prices tracking US light, sweet crude this week fell into correction territory, with prices down 10% or more from recent highs.

Prices have since recovered some ground, with Brent and WTI each rising by more than 4% on Friday. Brent traded above $64 a barrel after sliding below $61 this week. WTI hovered close to $61 following its drop under $58 a barrel.

Also on Friday, the Energy Select Sector SPDR Fund rose 1.8%, the Vanguard Energy ETF picked up 1% and the SPDR S&P Oil & Gas Exploration & Production ETF added on 2.3%.

Oil prices gained on expectations of tighter oil supplies while a cargo ship remains stuck in the Suez Canal, a key trade route that’s used to transport crude and refined products and connects Europe to Asia. Analysts have said it may be weeks before the Ever Given, a nearly 200-foot-wide and 1,300-foot-long vessel, is dislodged from the canal.

The blockage is costing $400 million an hour in delayed goods, according to a Lloyd’s List estimate, with hundreds of cargo ships are now unable to pass through the canal.

“The blockage has impacted over 20 oil tankers and the longer this lasts, it should drive oil prices higher,” Edward Moya, senior market analyst at Oanda, wrote in a note. Meanwhile, “Europe is slowly getting their vaccine rollout in order and that should trigger energy traders to price in an improved crude demand outlook by the summer,” he said.

As the summer driving season approaches in the US, roughly 14% of the population has been vaccinated for the coronavirus, according to the Centers for Disease Control and Prevention. President Joe Biden on Thursday raised his vaccination goal to 200 million for the first 100 days of his administration after hitting his previous target of 100 million.

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Oil tumbles 8% as uneven vaccine rollout threatens demand prospects

oil texas
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas.

  • Brent and West Texas Intermediate oil futures each fell by 8% during Thursday’s session.
  • Rising COVID-19 cases in Europe are hurting demand prospects for oil.
  • A rise in the US dollar was also putting pressure on the commodity.
  • See more stories on Insider’s business page.

Oil prices were sharply knocked down Thursday, hurt in part by a dimmer outlook from Europe as the region battles rising COVID-19 cases counts and a sluggish rollout of vaccinations to curb the spread of the disease.

Brent oil, the international benchmark, extended its run of losses into a fifth session and West Texas Intermediate crude was in its sixth consecutive session in the red.

“Europe is struggling with COVID. Their pickup in crude demand is likely to lag the Americas and it’s probably going to really threaten a lot of hopes that we were going to see a big pickup this summer,” Ed Moya, senior market analyst at Oanda, told Insider on Thursday.

Brent oil fell 8% to $62.52 barrel and WTI fell by 8.3% to $59.25 per barrel.

Several European countries were recording a rise in coronavirus infections, prompting France on Thursday to declare new lockdown measures in Paris while Italy this week imposed movement restrictions.

Oil prices found no relief Thursday from the European Medicines Agency’s ruling that AstraZeneca‘s coronavirus vaccine developed with Oxford University is safe to use. The review came after several European countries suspended the vaccine’s use following reports of blood clots in some people who had been injected with the formula.

Meanwhile, oil was under pressure in the wake of the Federal Reserve’s policy meeting on Wednesday during which it upgraded its growth projections for the US economy.

“You have a stronger dollar which has emerged from the surge in Treasury yields, which is also weighing on commodities as well,” said Moya. The US Dollar Index rose 0.5% to 91.87.

The 10-year Treasury note yield note yield surged past 1.7% on Thursday, marking a fresh 14-month high and the 30-year yield rose to 2.5% for the first time since August 2019. Higher yields tend to make the greenback more attractive to holders of other currencies.

While the outlook for European oil demand looks weakened by the COVID crisis, there are still expectations for stronger oil demand from the US with vaccinations on the rise, said Moya.

“It’s going to be a very busy summer travel season and I think jet fuel demand will also bounce back. We haven’t seen airlines really increase their flights…but once we start to see that, that’s going to be very positive for the demand forecast.”

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Brent oil will climb 17% from current levels as demand outpaces supply, Goldman Sachs says

FILE PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.  REUTERS/Angus Mordant
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County

  • Brent oil should rise to $70 during the second quarter and to $75 in the third quarter, said Goldman Sachs in a research note Monday. 
  • OPEC and its allies will likely increase production at its March meeting but that still may fall short of Goldman’s demand forecast. 
  • Global oil demand should hit 100 million barrels per day by late July, the investment bank says. 
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Brent oil should jump 17% from current levels to $75 per barrel this summer, with Goldman Sachs expecting a lag in supply relative to demand to support a further gain in prices.

The Organization of the Petroleum Exporting Countries and its allies next month are poised to agree to boost production but the investment bank said the increase will likely fall short of its demand forecast.

Goldman Sachs now expects Brent to reach $70 in the second quarter and $75 in the third quarter, with each forecast raised by $10 per barrel. The investment bank’s call would represent a 17% upside from Brent’s intraday high of $63.94 in its continuous contract.

The “cross-asset oil outperformance this year remains driven by fundamentals, with better than expected demand and still depressed supply once again creating a larger deficit than even we expected in January and February, and with timespreads strengthening,” said Goldman Sachs in a research note published Monday and led by senior commodity strategist Damien Courvalin.

Brent oil prices have jumped about 23% this year after starting 2021 at nearly $52 per barrel. The vaccination of millions of people worldwide to curb the spread of COVID-19 has bolstered expectations that more businesses will reopen, which in turn brighten the outlook for oil demand.

OPEC next month appears ready to raise its oil production quotas by 500,000 barrels a day beginning in April, with Goldman Sachs saying its base case also includes Saudi Arabia reversing its production cut of 1 million barrels a day, a unilateral move announced in January.

“This remains however well below the 2.4 [million barrels per day] increase in demand we forecast from now to April — with as a result an agreement to hike production not bearish in our view,” said Goldman Sachs. “In fact, these barrels would arrive a month later at destination by which point we expect demand would have risen an additional 0.2 mb/d, further tightening the spot oil market.”

Goldman also said it has seen no signs of higher activity among most non-OPEC+ producers outside of North America, which creates risks that output will fall short of its demand forecasts by 900,000 barrels per day over the coming year.

Global oil demand should reach 100 million barrels a day by late-July, said Goldman Sachs, which would be sooner than its previous forecast for oil to reach that level in August.

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