Stock Market News For July 13, 2016

Benchmarks closed in the green on Tuesday for the third consecutive session after oil prices rebounded and Alcoa (NYSE:AA) posted better-than-expected earnings. Moreover, reduced “Brexit” woes and rising possibilities of additional stimulus measures in Japan also boosted key U.S. indexes. The Nasdaq ended in positive territory for the year and the Dow and S&P 500 closed at new all-time highs.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) increased 0.7%, or 120.74 points, to close at 18,347.67. The S&P 500 also rose 0.7% to close at 2,152.14. The tech-laden Nasdaq Composite Index closed at 5,022.82, also gaining 0.7%. However, the fear-gauge CBOE Volatility Index (VIX) increased nearly 0.1% to settle at 13.55. A total of around 7.6 billion shares were traded on Tuesday, lower than the last 20-session average of 7.81 billion shares. Advancers outpaced declining stocks on the NYSE. For 69% stocks that advanced, 28% declined.

“Brexit” fears lessened yesterday following news that Home Secretary Theresa May will succeed British Prime Minister David Cameron following his resignation today. This in turn reduced several months of uncertainty following Britain’s decision to “Leave” the European Union by a significant extent.

Further, Japan’s Prime Minister Shinzo Abe is expected to come up with additional economic stimulus measures following his party’s victory in the country’s upper house election on Sunday. Abe asked his economy minister Nobuteru Ishihara to provide detailed economic stimulus measures by the end of July to improve the country’s economy.

Reduced “Brexit” worries and Abe’s initiative to launch more stimulus measures had a broad-based positive impact on oil prices. Moreover, OPEC forecasted yesterday that new oil demand will be 1.2 million barrels per day (bpd) in 2017, nearly 300,000 bpd more than the average of the last 10 years. Further, non-OPEC crude production is expected to fall by 880,000 bpd in 2016, to 56.03 million barrels, as compared to last year. This in turn further pushed oil prices northward. Both WTI and Brent crude rose 4.4% and 4.6% to $46.80 a barrel and $48.47 per barrel, respectively.

Increase in oil prices led the Energy Select Sector SPDR (XLE (NYSE:XLE)) to increase 2.5%, which emerged as the biggest advancer among the S&P 500 sectors. Key energy stocks including, Southwestern Energy Company (NYSE:SWN) (SWN), Chesapeake Energy Corporation (NYSE:CHK) ( CHK), Transocean Ltd (NYSE:RIG). (RIG), Murphy Oil Corporation (NYSE:MUR) (MUR) and Murphy Oil Corporation (MUR) rose 10.1%, 9.6%, 9%, 7.9% and 7.2%, respectively. Dow components Exxon Mobil Corporation (NYSE:XOM) (XOM) and Chevron Corporation (NYSE:CVX) (CVX) increased 1.1% and 1.3%, respectively.

In earnings news, Alcoa Inc’s (AA) shares advanced 5.4% after its second quarter adjusted earnings of 15 cents per share beat the Zacks Consensus Estimate of 9 cents. Quarterly revenues of $5,295 million also outpaced the Zacks Consensus Estimate of $5,251 million. However, earnings and revenues for the quarter fell 21% and 10% year-over-year, respectively. Alcoa unofficially started second quarter earnings season.

Alcoa’s higher-than-expected earnings results led the Materials Select Sector SPDR (XLB) 1.8% higher, which emerged as the second best performer among the S&P 500 sectors. Key components from materials sector including Freeport-McMoRan Inc. (FCX), CF Industries Holdings (NYSE:CF), Inc. (CF), Nucor Corporation (NYSE:NUE) ( NUE), E. I. du Pont de Nemours and Company (DD) and Praxair Inc (NYSE:PX). (PX) increased 10.7%, 5.5%, 3.5%, 2.7% and 2.3%, respectively.

In economic news, the U.S. Department of Commerce announced that US wholesale inventories advanced only 0.1% in May. It was lower than the April’s revised increase of 0.7% and consensus estimate of 0.2% rise.