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Oil Rally Lifts Wall Street As Chinese Markets Recover

Published 09/17/2015, 11:19 AM
Updated 03/09/2019, 08:30 AM

Surging oil prices supported US stocks Wednesday, while Chinese markets posted their biggest rally in nearly three weeks ahead of the Federal Reserve’s interest-rate announcement.

The S&P 500 Index climbed 0.9 percent to 1,995.31, with nine of its ten main sectors reporting gains. The energy sector led the growth, climbing 2.8 percent. The S&P’s materials component also rose 1.4 percent, while consumer discretionary and consumer staples each rose 1.1 percent.

The Dow Jones Industrial Average closed up 140.10 points or 0.9 percent at 16,739.95. The NASDAQ Composite advanced 0.6 percent to 4,889.24.

Rallying oil prices supported Wall Street Wednesday after the US Energy Information Administration (EIA) reported a large drawdown in commercial stockpiles. Inventories declined by 2.1 million barrels last week, EIA data showed. Drawdowns at the Cushing, Oklahoma delivery point were 1.9 million.

The price of West Texas Intermediate (WTI) crude climbed 5.7 percent to $47.15 a barrel. Brent crude, the international benchmark, rose 4.6 percent to $49.96 a barrel.
Binary Options Traders track the weekly EIA inventory report to determine supply and demand for US crude, which has a significant impact on global prices.

Wall Street was undeterred by weak data on Wednesday showing the first drop in US inflation since January. Consumer prices fell 0.1 percent in August compared with a 0.1 percent gain the prior month. A medina estimate of economists forecast no change.

So-called core prices, which strip away volatile goods such as food and energy, rose just 0.2 percent over the previous month.

Weak inflation data added to signs of an uneven US recovery in the third quarter. On Tuesday the Commerce Department said retail sales slowed in August, while industrial production fell again. These weak points are likely to give the Federal Reserve enough justification to hold off on raising interest rates later this week.

Global stocks recovered on Wednesday, especially in China, where the Shanghai Composite Index rose nearly 5 percent to its biggest one-day rally in nearly three weeks. The Hang Seng Index also rose 2.4 percent on the day.

Imperial Options Traders saw share prices rise throughout Europe, especially in London, where the benchmark FTSE 100 advanced 1.5 percent. About 85 percent of the stocks listed on the FTSE reported gains, led by a nearly 20 percent surge for beer giant SABMiller PLC (LONDON:SAB). The beer maker rallied on news that it was merging with Anheuser-Busch Inbev (NYSE:BUD), the world’s largest brewer.

In currency news, the US dollar weakened across the board as investors tempered their rate hike bets. The dollar plunged against the British pound after the UK Office for National Statistics reported stellar labor-market data.

Average earnings in the UK surged 2.9 percent annually in the three months through July, the fastest since 2009. The unemployment rate also fell to 5.5 percent in the May through July period.
The GBP/USD exchange rate surged more than 1 percent or 150 pips to 1.5495. The pair briefly traded above 1.5500 in the European session.

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