NEW YORK – Wall Street rallied Thursday for its first gain in three days after a sudden surge in oil prices revived beaten-down energy stocks. But, as has so often been the case in this year's volatile market, it took a few U-turns to get there.
The price of crude spurted as much as 30% higher after President Donald Trump said he expects Russia and Saudi Arabia to back away from their price war, which helped drag U.S. oil to its lowest price in 18 years. The surge lifted energy stocks enough to pull the S&P 500 higher and outshine another report showing that millions of Americans are joining the unemployment queue by the week.
But stocks and oil quickly pared much of their initial gains and then see-sawed through the day as markets weighed how seriously to take Trump's statement, particularly after the Kremlin reportedly disputed part of his tweet, before climbing again to the close.
By the end of trading, the S&P 500 rose 2.3%, while U.S. oil was up $5.01, or 24.7%, after settling at $25.32 per barrel.
“Investors are just grasping at a positive straw here on a particular day,” said Phil Orlando, chief equity market strategist at Federated Hermes. “The collapse in the energy market is creating a significant amount of additional pressure on the U.S. economy, not nearly as significant as the coronavirus, but significant nonetheless.”
The market's focus has been on oil not just because its plunge to below $20 earlier this week from $60 at the start of the year has caused stocks in the industry to more than halve. Another worry is that heavily indebted oil companies will also be forced to default, which could cause more damage in the bond market where the total amount of debt has exploded.
Producers have been continuing to pull oil from the ground to maintain their market share, even as demand for energy cratered because of widespread stay-at-home orders and other economy-damaging restrictions caused by the coronavirus outbreak. Trump tweeted Thursday that he hopes and expects cuts in production are coming after talking with Saudi Crown Prince Mohammed bin Salman.
That helped energy stocks in the S&P 500 rally 9.1%, by far the biggest gain among the 11 sectors that make up the index.
At a glance
• The S&P 500 rose 56.40 to 2,526.90
• The Dow Jones Industrial Average gained 469.93, or 2.2%, to 21,413.44
• The Nasdaq rose 126.73, or 1.7%, to 7,487.31