Oil major BP has reported lower profits and says it will cut spending on exploration because of the fall in oil prices. But as Hayley Platt reports a surprise contribution from its stake in Rosneft helped it beat forecasts.Reuters
North American stocks rose for a second day as a four-day rally in energy stocks spread to the broader market.
The Dow Jones industrial average jumped 305.4 points to 17,666.40. The S&P 500 gained 29.18 points to 2,050.03, while the Nasdaq composite rose 51.05 points to 4,727.74.
In Toronto, the S&P/TSX composite index surged 162.3 points to 15,062.77, as the rally in crude prices continued with crude closing above $50 (U.S.) a barrel for the first time in a month as cutbacks by major producers raises hopes that prices have bottomed.
The TSX energy sector gained four per cent as oil in New York shot up $3.48 to $53.05 (U.S.) a barrel, adding up to a 19-per cent surge in prices over the last four sessions. However, prices are still down about 50 per cent from the most recent highs reached last June because of a huge oversupply on world markets.
The Canadian dollar was buoyed by the oil price rally and rose 1.16 cents to 80.67 cents (U.S.).
Oil soared again Tuesday as the low prices of the past few months force oil companies to slow down production in the U.S. and elsewhere. BP became the latest major oil company to announce it will cut exploration spending this year.
The gains began Friday with a report showing a sharp drop in the number of rigs in the U.S. drilling for oil. On Monday, BP announced a 20 per cent drop in capital spending for this year. That follows Chevron's projected cut of 13 per cent.
Exxon Mobil Corp. and Chevron Corp. climbed more than 2.6 per cent as oil rose. Freeport-McMoRan Inc. rose 9.1 per cent as commodities had the biggest three-day advance since 2012. Office Depot Inc. jumped 22 per cent after the Wall Street Journal reported the company is in advanced merger talks with Staples Inc.
"The fact that oil is stabilizing takes some edge off the argument that the global economy is really in trouble," Bruce Bittles, chief investment strategist at Milwaukee-based RW Baird & Co., which oversees $110-billion, said in a phone interview. "The markets are a little oversold after being down in January, which is also part of the strength today."
The S&P 500 rebounded 1.3 per cent Monday as a rally in crude sparked gains in energy shares. The index lost 3.1 per cent in January, the worst performance in a year, after reaching an all-time high on Dec. 29. The two-day rally has trimmed the gauge's decline for the year to 0.7 per cent.
Energy shares in the S&P 500 are up 6.6 per cent over the past four sessions, the most since December, and the group is now up 0.5 per cent for the year. The industry tumbled 20 per cent from a June high through the end of the year as crude entered a bear market.
Denbury Resources Inc. soared 11 per cent, following a 12 per cent rally on Monday. Oil and gas explorer EOG Resources Inc. rose 4.1 per cent, and energy services company Schlumberger Ltd. added 3.3 per cent.
Caterpillar Inc. climbed 3.8 per cent, its best gain since November and the biggest advance in the Dow. The company fell 6.6 per cent last week after the company blamed lower oil prices in cutting its 2015 profit outlook.
In Toronto, a major energy sector gainer was Canadian Oil Sands, which jumped C$1.94 or 20.5 per cent to C$11.39. Its stock has soared 60 per cent since Thursday after TD Securities raised its price target. There were also reports Canadian Oil Sands could become a takeover target by one of its partners in Syncrude Canada Ltd., which is a joint venture between seven energy companies.
The base metals sector jumped 6.6 per cent as March copper soared nine cents to US$2.58 a pound.
Financials also lent key support, rising 2.55 per cent.
The gold sector was the major decliner, down about four per cent as April bullion lost $16.60 to US$1,260.30 an ounce.
In other earnings news, WestJet Airlines Ltd. posted a record fourth-quarter profit of $90.7 million or 70 cents a share, in line with estimates. That was up 34 per cent from $67.8 million a year ago. Revenue was $994.4 million, up 7.3 per cent from a year ago and also in line with estimates. The carrier hiked its dividend by 17 per cent as well, but WestJet shares drifted 80 cents lower to $31.10.
U.S. equities followed European stocks higher earlier in the day after Greece retreated from a plan to ask the euro area to write down debt. That eased concern that the nation would defy its creditors.
"Bullish sentiment remains elevated," Benedict Goette, founder of asset-management firm Compass Capital AG in Zurich, said in an e-mail. "For the next one-to-two weeks, U.S. markets will be trying to find a new direction and will be prone to fake-outs – up as well as down – and this could be a very challenging trading environment."
Office Depot Inc. jumped 22 per cent after the Wall Street Journal reported the company is in advanced merger talks with Staples Inc. Staples added 11 per cent.
Auto Sales Ford Motor Co. and General Motors Co. climbed after January data showed the two led automakers with the biggest U.S. sales. GM rose 2.9 per cent after an 18 per cent sales increase, and Ford added 2.6 per cent as it reported a 16 per cent gain in light– vehicle sales.
Eaton Corp., a maker of circuit breakers and large truck transmissions, soared 8.3 per cent, the most since 2009, after reporting earnings that beat analysts' estimates on strong U.S. housing demand and truck sales.
Arch Coal Inc. added 12 per cent after reporting a narrower fourth-quarter loss compared to a year ago after raising output at lower-cost mines. The company also suspended its 1-cent quarterly dividend to preserve liquidity, Chief Financial Officer John T. Drexler said in a statement.
Whiting Petroleum Corp. rose 13 per cent to $37.40 after being raised to buy from hold by Stifel Nicolaus & Co. equity analyst Michael Scialla, who projects the shares to rise to $45 in the next 12 months.
Luminex Corp. fell 13 per cent drop after the company predicted first-quarter and yearly revenue below analysts' estimates. Isis Pharmaceuticals Inc. declined 5.1 per cent after Deutsche Bank analyst Alethia Young said the company's diabetes data don't appear as strong as similar drugs.
Walt Disney Co. and Chipotle Mexican Grill Inc. are among 25 S&P 500 members reporting financial results today. About 78 per cent of the companies that posted earnings this season have beaten analyst estimates, while 54 per cent have topped sales projections, data compiled by Bloomberg show.
With files from The Associated Press and The Canadian Press