S&P 500 opens at record high on oil gains, jobs data

The S&P 500 opened at a record high on Monday as oil prices rose and after Friday’s stellar jobs report suggested strength in the US economy, boosting appetite for risk.

Oil rose 1.8 per cent after a report in the Wall Street Journal last week that some Opec members had called for a freeze in production.

Seven of the 10 major S&P 500 indexes were higher, led by a 0.96 per cent rise in the energy sector.

Oil majors Exxon Mobil and Chevron rose about 0.6 per cent and were the top drivers of the S&P.

Gold, a traditional safe-haven asset, fell to a one-week low, while the Japanese yen remained weak, suggesting that the markets were in a risk-on mode.

"We're coming off a strong session on the back of solid economic data that the markets needed to justify additional exposure to equities," said Andre Bakhos, managing director at Janlyn Capital.

“There is ample evidence that equities are the only game in town right now.”

In early trading the Dow Jones industrial average was up 15.59 points, or 0.08 per cent, at 18,559.12. The S&P 500 was up 2.07 points, or 0.09 per cent, at 2,184.94. The Nasdaq Composite was up 5.04 points, or 0.1 per cent, at 5,226.16 and is just 5 points away from its record high.

Although strong jobs report could strengthen the case for an interest rate hike, analysts have said the central bank may wait for more data before it makes the move.

While traders priced in higher rate-hike chances in the near term, they do not expect the Fed to pull the trigger even until July next year, according to CME Group’s FedWatch tool.

A better-than-expected corporate earnings season and strong economic indicators have fueled a rally in equities, with the S&P 500 notching 10 record highs since July, including on Monday.

Earnings of S&P 500 companies are expected to fall 2.6 per cent in the quarter, compared with the 5 per cent decline expected at the start of the season, according to Thomson Reuters I/B/E/S.

Allergan shares lost 1.2 per cent after the drugmaker slashed its revenue forecast for the year.

Mattress Firm shares more than doubled to $63.70 after Steinhoff International agreed to buy the company. The stock gave the second-biggest boost to the Nasdaq after Apple's 0.4 per cent gain.

Advancing issues outnumbered decliners on the New York Stock Exchange by 1,775 to 870. On the Nasdaq, 1,429 issues rose and 840 fell.

The S&P 500 index showed 21 new 52-week highs and no new lows, while the Nasdaq recorded 51 new highs and four new lows.

Reuters