Canada’s TSX closed at yet another record high Monday, joining the Dow Jones Industrial Average in notching an all-time peak, as the energy sector rallied after weather-related supply curtailments in the U.S. On Wall Street, cyclical sectors gained on the prospect of more fiscal aid to lift the U.S. economy from a coronavirus-driven slump.
The Nasdaq, however, dipped as technology stocks moved lower, while concerns over rising interest rates kept the benchmark S&P 500 little changed.
The S&P/TSX Composite Index closed up 32.29 points, or 0.17%, at 18,492.50, with the energy sector gaining 2.95%. Most other sectors posted modest losses, although cannabis equities rose robustly as the retail-led buying frenzy in those stocks continued. Aphria gained 27.61% and Aurora Cannabis 12.91%.
Oil prices settled near 13-month highs, supported by a deep freeze in the U.S. South that shut wells and oil refineries in Texas.
Prices have been buoyant for months, with major oil producing countries restricting supply and vaccines rolling out to combat the coronavirus pandemic.
U.S. West Texas Intermediate (WTI) crude futures settled up 1% to $60.05, after touching their highest since early January 2020. Brent settled up 5 cents, or 0.1%, to $63.35 a barrel, near the 13-month peak reached the previous session.
“Cold temperatures have added supply side support amidst numerous well freeze-offs and several refinery disruptions as some facilities have seen forced shutdowns due to power restriction,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
Rystad Energy analysts estimated that between 500,000 and 1.2 million barrels of crude oil production in the United States will be shut due to the cold. About 3 million bpd of refining has been closed, with some of the largest U.S. refiners shutting processing, including Motiva Enterprises facilities at Port Arthur, Texas, the country’s largest.
Middle East supply concerns also rose after the Saudi-led coalition fighting the Houthi group in Yemen said on Monday that it had destroyed an explosive-laden drone fired by the Houthis at the kingdom, the world’s biggest oil exporter.
In the U.S., sectors poised to benefit the most from a reopening economy, including energy and financials, had the biggest percentage gains. President Joe Biden has pitched a $1.9 trillion pandemic relief bill and is pressing Congress to pass it in the coming weeks in order to get $1,400 stimulus checks to Americans and bolster unemployment payments.
The S&P 500 banking index climbed as the yield on 10-year U.S. Treasuries hit its highest since February 2020.
“We came into this week with a positive perspective on the Biden administration’s attempt to deliver a sizeable package,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. “Markets have greeted that with positive moves.”
Conversely, utilities and real estate posted the biggest percentage losses among S&P 500 sectors. Utilities and real estate, because of their steady earnings and high dividend yields, are often considered bond proxies and tend to move in tandem with Treasuries. Shares of homebuilders, which are rate-sensitive, also fell. The PHLX Housing Index ended 2.5% lower.
Technology stocks slipped as well. That sector includes many stocks with high earnings multiples, which may also come under pressure with rising yields, according to some market analysts.
The S&P 500 backed off from session highs as yields rose on Tuesday, which reflected investor worries about the day’s surge in bond yields, said Robert Phipps, director at Per Stirling Capital Management in Austin, Texas. Equities would likely tolerate a gradual ascent in rates, but a sprint higher could create turbulence, in his view.
“Even though interest rates are still really low, the stock market is going to be very, very sensitive to changes,” he said.
The Dow Jones Industrial Average rose 63.82 points, or 0.2%, to 31,522.22, the S&P 500 lost 2.25 points, or 0.06%, to 3,932.58 and the Nasdaq Composite dropped 47.98 points, or 0.34%, to 14,047.50.
A sharp drop in new coronavirus infections, progress in vaccinations and a stronger-than-expected fourth-quarter earnings season have reinforced hopes of a quick business recovery this year.
This week’s earnings reports from Hilton Worldwide Holdings Inc, Hyatt Hotels Corp, Marriott International Inc , Norwegian Cruise Lines and TripAdvisor Inc will be closely watched for signs of a pickup in global travel demand.
Shares of cryptocurrency and blockchain-related firms including Silvergate Capital Corp, Riot Blockchain and Marathon Patent Group surged between 8% and 21% as bitcoin briefly climbed past $50,000.
Investors will also focus this week on the minutes from the Federal Reserve’s January meeting, where it reaffirmed its pledge to maintain a dovish policy stance.
Declining issues outnumbered advancing ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favored advancers.
The S&P 500 posted 76 new 52-week highs and no new lows; the Nasdaq Composite recorded 383 new highs and 11 new lows.
Volume on U.S. exchanges was 14.89 billion shares, compared with the 15.96 billion average for the full session over the last 20 trading days.
Market movers: Stocks that saw action on Tuesday - and why
Reuters, Globe staff
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