Stocks in the U.S. closed at records Monday, having hit the same milestone on Thursday for the first time since December 31, 1999. Rising crude oil prices lifted commodity-linked stocks, leading to widespread equity gains in the U.S.
Prices for crude oil for September delivery rose close to 3% to $45.74 a barrel. That marked the highest settlement for light, sweet crude oil since July 15.
Oil prices were rising Monday as traders continued to bet that the September informal meeting of the OPEC members could result in production freeze, though chances are slim. The prolonged oil price fallout has rattled the economies of many oil exporters that now appear willing to talk about an output cap to at least help lift the price of the commodity. That would, however, encourage more competition from marginal producers that OPEC is trying to price out of the market.
Saudi Arabia, which a few months ago refused to commit to an output cut if rival Iran wasn’t doing the same, has indicated that it is now open to measures that will help stabilize the price of crude oil. These could still be only a head fake, as no country has an ability to monitor and control the output of another.
How the major indexes reacted to rising crude prices
The Dow Jones Industrial Average (INDEXDJX:.DJI) rose 0.3% to 18636.05. The S&P 500 (INDEXSP:.INX) gained 0.3%, to 2190.15. The NASDAQ Composite (INDEXNASDAQ:.IXIC) climbed 0.6%, to 5262.02. The Monday’s action saw the NASDAQ close at record for the third session in a row.
The biggest gainers in Monday’s trading were mining, industrial and chemical stocks. Caterpillar Inc. (NYSE:CAT) rallied up 1.4%, while E I Du Pont De Nemours And Co (NYSE:DD) rose 1.5%.
Rising stocks indicated that traders were willing to shrug off downbeat U.S. retail-sales data for July that were released last Friday. Slowing consumer purchases saw retail-sales stay flat last month at a time when economists were expecting a growth of at least 0.4%. U.S. retail-sales rose 0.8% in June.
Given the weaker retail-sales data, some experts have doubted whether the stocks rally can be sustained for long. “I would be a bit more conservative here and look to buy on pullbacks,” said Bruce Bittles of Robert W. Baird.
Some other analysts believe that the back-to-school season will usher in another round of equity rallies. “Hopefully, as we get into back-to-school season, we’ll see those numbers start to spike up a bit,” observed Paul Springmeyer of U.S. Bank’s Private Client Reserve.