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Meidell: Oil news helps major markets set records

By November 21, 2016 No Comments

After gapping higher at the opening bell, U.S. stocks continued to add to their gains Monday, extending the rally that began the day prior to the presidential election, and sending the message that the bulls are clearly in charge.

Though the major market averages appeared last Friday to be rising at a slowing pace, and potentially stalling out, stocks were re-energized Monday as crude oil prices leaped higher. The gains in oil came after favorable news from OPEC’s meeting in Vienna this week gave investors hope that a deal could be reached to cut production. U.S. crude oil rose nearly 4 percent Monday to close at $47.49 per barrel, as word spread that Iran and Iraq were backing the proposal to cut output.

All the major market averages closed at record highs Monday while riding on the coattails of crude oil prices. Having multiple indexes break out to new highs shows that the advance is broad, and typically sends the message that the stock market has more room to run. The Standard and Poor’s 500 rose 0.75 percent and the Nasdaq Composite gained 0.89 percent.

Not surprisingly, the top performing sector on Monday was the Dow Jones U.S. Energy index, up 2.30 percent and higher by 4.16 percent over the past five trading days. Other leading sectors over the past week were the Dow Jones U.S. Technology index, higher by 3.97 percent, and the Dow Jones U.S. Consumer Services index, rising 2.19 percent over the same period.

As we head into the Thanksgiving holiday and a shortened trading week, the good feelings around the holiday tend to rub off on investors, usually resulting in a positive bias leading up the event. Market volume also tends to drop off the day before Thanksgiving as traders travel, or just prepare to partake in their holiday traditions.

For the week, energy commodities dominated the market, with the top-performing commodities led by the S&P GSCI Brent Crude Oil index, up 9.87 percent over the past five trading days, followed by the S&P GSCI Unleaded Gasoline index, up 9.12 percent.