Investing.com - Energy stocks withstood the overall market unease ahead of an expected Federal Reserve rate cut on Wednesday and rallied on top of rising crude prices.
The Fed is expected to cut its federal funds rate, the rate it wants banks to charge each other for overnight loans, by a quarter point to 2% to 2.25%. Investing.com's Fed Rate Monitoring Tool puts the odds at 100%. A second quarter-point rate cut is expected to come in September, though there is skepticism the rate cut is really needed.
The waiting meant many investors and traders weren't willing to take big positions ahead of the Fed announcement at 2 PM ET (18:00 GMT)
The S&P 500 finished down 0.3%. The Nasdaq Composite index slipped 0.24% and the Dow dropped 0.1%.
Meanwhile, as investors and traders waited for the Fed decision and earnings reports from Apple (NASDAQ:AAPL) and Advanced Micro Devices (NASDAQ:AMD) after the Tuesday close, energy investors started reacting to the immediate stimulus of higher crude prices.
Apple shares were off slightly ahead of the fiscal-third-quarter report, but it beat market expectations. In after-hours trading, the shares were up around 4%. If the gains hold on Wednesday, its market cap could top $1 trillion for the first time since last fall.
Futures trading Tuesday afternoon suggests a weak open, but the real action will come after the Fed announcement.
West Texas Intermediate crude rose 2.1% to $58.05 a barrel. Brent crude, the global benchmark, climbed 1.6% to $64.72. Prices moved higher because of hopes a rate cut will boost economic activity and demand for energy. In addition, traders saw reports that Iranian exports were down substantially. The U.S. Energy Information Administration will issue its weekly report on oil inventories Wednesday morning.
Those gains – plus higher natural gas prices – boosted stocks of oil-and-gas production companies as well as big integrated companies. Noble Energy (NYSE:NBL) was up nearly 6%. Anadarko Petroleum (NYSE:APC) added 1.1%.
Among the majors, Chevron (NYSE:CVX), Royal Dutch Shell (NYSE:RDSa) and BP (NYSE:BP) were all higher. Exxon Mobil (NYSE:XOM) was down slightly.
The Dow briefly pushed into the green, partly because of strong earnings from Procter & Gamble (NYSE:PG), up 3.8%, and a rebound in shares of Boeing (NYSE:BA). But the blue chips were pulled down by Pfizer (NYSE:PFE), Intel (NASDAQ:INTC), Verizon Communications (NYSE:VZ) and McDonald’s (NYSE:MCD)
The S&P and Nasdaq remained stubbornly in the red all day.
Interest rates were higher, with the 10-Year Treasury yield drifting up to 2.06% from 2.055% on Monday.
Energy, real estate, materials and industrial stocks were the strongest market sectors on Tuesday. Utilities, telecommunications and consumer discretionary stocks were lower.
Winners and Losers Among the S&P 500
National Oilwell Varco (NYSE:NOV), Martin Marietta Materials (NYSE:MLM), Westinghouse Air Brake Technologies (NYSE:WAB), biopharmaceutical company Incyte (NASDAQ:INCY) and Cimarex Energy (NYSE:XEC) were among the top S&P 500 performers on the day.
Technology research firm Gartner (NYSE:IT), Under Armour (NYSE:UA), HCA Holdings (NYSE:HCA) and DISH Network Corporation (NASDAQ:DISH Network) were among the worst S&P 500 performers on the day.