NEW YORK (AP) — Stocks are climbing Tuesday and breaking out of a slump that dragged the market lower last week. The price of oil is also rising for a second day in a row in a modest recovery from long-time lows. Natural gas prices slumped again.
KEEPING SCORE: The Dow Jones industrial average rose 242 points, or 1.4 percent, to 17,610 as of 2:18 p.m. Eastern. The Standard & Poor’s 500 index picked up 30 points, or 1.4 percent, to 2,052. The Nasdaq composite index added 70 points, or 1.4 percent, to 5,022.
BUMPY RIDE: Stocks have thrashed around since the end of a six-week winning streak in November. A month ago U.S. indexes made their biggest gains in a year, then last week they endured their second-worst week of 2015 as oil prices tumbled and energy and mining stocks skidded. It’s been more than a month since the S&P 500 rose for two consecutive days.
PRICE GAIN: The government said prices for a variety of goods and services rose last month, including plane tickets and medical care. Overall prices were unchanged from last year because food and energy prices are weak, but “core inflation,” which leaves out energy and food, rose 0.2 percent. That’s the best result in more than a year.
FED MEETS: The Federal Reserve started its final meeting of 2015, and on Wednesday it’s expected to raise interest rates for the first time in almost 10 years. The increase in prices is another sign the economy is strong enough to withstand a higher interest rates. The Fed believes food and energy prices will return to normal and focuses more on the core measurement.
Michelle Girard, chief U.S. economist for RBS, said the reassuring signal on inflation should remove any last barriers to the Fed beginning to raise borrowing costs back closer to normal historical levels. The inflation news gave the Fed “a green light to take action tomorrow,” Girard said.
ENERGY: Energy stocks were the top-performing sector on the S&P 500 as the price of oil rose again. U.S. crude gained $1.17, or 3.2 percent, to $37.48 a barrel in New York. If that holds up, it would be the biggest jump in oil prices since early November. Oil increased about 2 percent Monday, although it remains at its lowest prices in more than six years. Brent crude, a benchmark for international oils, rose 91 cents, or 2.4 percent, to $39.09 a barrel in London.
That helped the energy sector, which has struggled throughout 2015. Exxon Mobil jumped $3.30, or 4.3 percent, to $79.33, putting the stock on pace for its best day since late August. Offshore drillers Ensco added $1.06, or 7 percent, to $16.25 and Transocean rose 6 cents, or 5.2 percent, to $13.30.
Natural gas prices continued to fall, dropping 7 cents, or 3.5 percent, to $1.83 per 1,000 cubic feet. Earlier natural gas reached its lowest price since March 1999, not adjusted for inflation.
BANKS SURGE: Banking stocks climbed as investors anticipated that higher interest rates would help banks become more profitable by charging more for loans. JPMorgan Chase rose $2.26, or 3.5 percent, to $66.53 and Wells Fargo gained $1.74, or 3.3 percent, to $54.95.
MEDIA STOCKS: Disney rose $3.56, or 3.2 percent, to $112.91 after the premiere of “Star Wars: The Force Awakens” Monday night. The Star Wars film will open nationwide on Friday. Satellite radio operator Sirius XM Holdings jumped after announcing that it had signed Howard Stern to another five-year deal. Its shares added 9 cents, or 2.2 percent, to $4.09.
DOESN’T STICK: Post-it notes maker 3M fell $8.54, or 5.4 percent, to $149.09 after it trimmed its profit forecast for 2015 and gave a disappointing estimate for 2016.
TAKING OFF: Aerospace company Boeing advanced $3.77, or 2.6 percent, to $146.77 after Boeing boosted stock buyback authorization to $14 billion and raised its quarterly dividend to $1.09.
BONDS: Investors dipped a toe back into the high-yield bond market after several days of selling “junk” bonds. The iShares high yield corporate bond ETF rose 1.7 percent to $80.19 and the SPDR Barclays high yield bond ETF rose 1.3 percent to $33.87.
High yield bonds have been attractive to investors in recent years because their returns are high and low interest rates have reduced their risks. But investors are becoming worried that more companies could default.
Guy LeBas, chief fixed income strategist Janney Montgomery Scott, said plunging oil prices, which have repeatedly set six-year lows, were a big contributor to the recent decline. And he thinks more pain is coming.
“Buyers of high yield bonds will be, on average, pretty happy five years from now,” he said. “But I think they’re going to be pretty unhappy in the next three months.”
Meanwhile, the prices of government-backed Treasury bonds fell, a move LeBas said was connected to the gains in stocks and high yield bonds. The yield on the 10-year note rose to 2.27 percent from 2.23 percent late Monday.
METALS: Gold fell $1.80 to $1,061.60 an ounce, while silver gained 7.5 cents, or 0.5 percent, to $13.77 an ounce. Copper fell 5.5 cents, or 2.6 percent, to $2.06 per pound.
CURRENCIES: The euro fell to $1.0913 from $1.0998. The dollar rose to 121.76 yen from 120.84 yen on Monday.
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Marley Jay can be reached at http://twitter.com/MarleyJayAP. His work can be found at http://bigstory.ap.org/journalist/marley-jay.
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