Bargain hunting lifts stocks as oil rally fades
By Chuck Mikolajczak
NEW YORK (Reuters) - Global equity markets rallied on Tuesday as investors engaged in bargain hunting and shrugged off a downturn in oil prices after hopes for an agreement among top producers to freeze output faded.
After an extended holiday weekend, Wall Street financials .SPSY, up 1.8 percent, and consumer discretionary stocks .SPLRCD, up 2.5 percent, were among the best performing sectors on the session after showing some of the largest declines for the year.
Top oil exporters Russia and Saudi Arabia agreed to freeze output levels but said the deal was contingent on other producers joining in, a major sticking point with Iran absent from the talks and determined to raise production.
The uncertainty around the negotiations dented expectations for a supply cut and sent oil tumbling off its highs. Brent crude LCOc1 settled down 3.6 percent at $32.18 after hitting a 12-day high of $35.55 a barrel. U.S. crude CLc1 settled off 1.4 percent at $29.04 after touching a high of $31.53.
After climbing as much as 1.1 percent, the S&P energy sector .SPNY closed up 0.8 percent.
"I take it as extremely positive news that the U.S. market is rallying on a day that crude is down," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
"We may be finally breaking that toxic correlation that we’ve been seeing that has been turning the entire financial world on its head."
The Dow Jones industrial average .DJI rose 220.44 points, or 1.38 percent, to 16,194.28, the S&P 500 .SPX gained 30.66 points, or 1.64 percent, to 1,895.44 and the Nasdaq Composite .IXIC added 98.44 points, or 2.27 percent, to 4,435.96. Continued...