U.S. stocks traded higher Thursday, following the prior day’s massive intraday reversal, as oil prices gained.
The Dow Jones industrial average added more than 150 points, with United Technologies and Goldman Sachs contributing the most to gains.
“I still think the shorts haven’t been neutralized. I think there’s a bit of a short squeeze going on,” said Daniel Deming, managing director at KKM Financial.
The major averages extended gains as oil turned higher, briefly rising 3 percent near $33 a barrel. Earlier, a brief 3 percent drop in oil prices weighed on U.S. stocks, which opened higher after a better-than-expected durable goods report but struggled to hold those opening gains.
“I think we’re still tethered to oil,” said Jack Ablin, chief investment officer at BMO Private Bank. “I’m not willing to declare the end of this correlation.”
U.S. crude oil futures settled up 92 cents, or 2.86 percent, at $33.07. The gains came after a Bloomberg report that the Venezuelan oil minister Eulogio Del Pino said his country, Saudi Arabia, Russia, and Qatar had settled on meeting in March.
The Nasdaq composite held higher as Apple and other major tech stocks erased earlier losses.
The S&P 500 traded about 0.8 percent higher after struggling for gains, with financials up more than 1 percent. Energy was the only sector holding a touch lower.
“I think (the earlier decline was) profit taking. I think we’re at a little bit of an inflection point here, looking for a new catalyst,” said Tom Wright, director of equities at JMP Securities, noting that driver could come from some announcements of major corporate deals.
“When energy stocks found some stability, the financials got really soft and that was a concern,” he said. “The financials are OK since then and we’d like to see a much bigger bounce in the financials to gain more confidence.”
Also weighing on sentiment earlier was the overnight 6.4 percent plunge in the Shanghai composite, while the Hang Seng lost nearly 1.6 percent. In contrast, Japan’s Nikkei 225 rose 1.4 percent.
“From a fundamental standpoint the market’s in a wait and see mode and to a large extent remains at the mercy of oil,” said Adam Sarhan, CEO of Sarhan Capital. “As goes oil, so goes the other risk assets.”
Treasury yields held lower, with the 2-year yield at 0.73 percent and the 10-year yield at 1.71 percent.
The U.S. dollar index traded little changed, with the euro at $1.10 and the yen at 112.73 yen against the greenback.
European stocks pared gains but held about 2 percent higher. The STOXX Europe 600 Banks outperformed, briefly trading more than 4 percent higher but still more than 30 percent below its 52-week intraday high.
U.S. stock index futures held mostly higher after January orders for durable goods jumped 4.9 percent, topping expectations with the largest increase since March and reversing December’s revised 4.6 percent plunge. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 3.9 percent after tumbling by a revised 3.7 percent in December, Reuters said.
“Favorable technicals and incrementally positive news should lend to perhaps a higher trend today,” BMO’s Ablin said.
The major U.S. averages staged a massive reversal Wednesday to close higher as some stabilization in oil prices offset declines in financials. The sector, which is the worst performer in the S&P 500 for the year so far, was among the top index advancers in morning trade Thursday.
St. Louis Fed President James Bullard, a voting member of the Fed, said on CNBC’s “Squawk Box” that he’s not too concerned about a global recession but he does see a “lower trend growth rate.”
Separately, Bullard late Wednesday reiterated his opposition to further interest rate hikes given that U.S. inflation expectations have fallen and threaten the U.S. central bank’s credibility.
Atlanta Fed President Dennis Lockhart reiterated Fed policy for rate hikes remains data dependent, according to StreetAccount.
San Francisco Fed President John Williams reiterated Thursday he expects the Fed to continue gradually raising interest rates. In a speech aimed at pushing back on political efforts to clamp down on Fed independence by imposing a Taylor-like rule on decisions, Williams said the central bank should avoid tying its policy-making to a single rule and continue to embrace an eclectic approach, according to Reuters.
On Wednesday, the Dow Jones industrial average reclaimed a 266-point drop — its largest recovery of losses by points since 2008 — and then went on to close up 53 points. The S&P 500 erased intraday losses of more than 1 percent for the third time in 2016 and closed up 0.4 percent.
In afternoon trade, the Dow Jones industrial average rose 131 points, or 0.8 percent, to 16,616, with United Technologies leading advancers and ExxonMobil the greatest laggard.
The S&P 500 rose 12 points, or 0.64 percent, to 1,942, with financials leading nince advancers and energy the only decliner.
The Nasdaq composite gained 15 points, or 0.33 percent, to 4,557.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 20.
About two stocks rose for every decliner on the New York Stock Exchange, with an exchange volume of 507 million and a composite volume of nearly 2.502 billion.
U.S. crude oil futures for April delivery rose 63 cents to $32.81 a barrel on the New York Mercantile Exchange.
Gold futures settled 30 cents lower at $1,238.80 an ounce.
—Reuters contributed to this report.
On tap this week:
Earnings: AB InBev, Bayer, Apache, Best Buy, Campbell Soup, Domino’s Pizza, Kohl’s, Chico’s FAS, Sears Holdings, SeaWorld, Baidu, Autodesk, Gap, Intuit, Kraft Heinz, Herbalife, Live Nation Ent., Noodles & Co., Weight Watchers
G-20 finance ministers meet in Shanghai
G-20 meets in Shanghai
Earnings: J.C. Penney, Foot Locker, Sotheby’s, Sempra Energy, AmericanTower, Centerpoint, Liberty Media, Telefonica, Rowan Cos
8:30 a.m. Real GDP Q4 (second reading); international trade
8:30 a.m.: Personal income, consumer spending
10 a.m. Consumer sentiment
Earnings: Berkshire Hathaway
*Planner subject to change.