S&P 500 Futures Led Higher by Surging Energy Stocks

US stocks traded higher Wednesday, boosted by a large rally in the energy sector and another solid earnings report from a New York bank.

The S&P 500 Index rose 4.69 points, or 0.2%, to 2,144.29. The energy sector was the strongest contributor to the gains, rising 1.4% after the US Energy Information (EIA) reported an unexpectedly large drawdown in commercial crude stockpiles.

US crude inventories fell 5.2 million barrels in the week to October 14. Nymex WTI crude futures surged nearly 3% to their highest level since July 2015.

The S&P 500’s financial index rose 0.8% after Morgan Stanley (NYSE: MS) capped off a strong earning season for the big banks. In the third quarter, the financial service provider posted earnings of 81 cents per share on revenue of $8.9 billion, zipping by forecasts calling for an EPS of 61 cents on sales of $8.2 billion.

Morgan Stanley was the last major US bank to report earnings. Citigroup (NYSE: C), Wells Fargo (NYSE: WFC), JPMorgan Chase & Co (NYSE: JPM) and Goldman Sachs Group (NYSE: GS) all reported earnings that were well above the median estimate.

Meanwhile, materials stocks added 0.7% Wednesday. Real estate, industrials and consumer discretionary stocks rose 0.3% apiece. Telecommunications services also finished in positive territory.
The consumer staples sector was the biggest laggard, closing down 0.7%. Health care also fell 0.3%, while utilities ended 0.2% lower.

All of Wall Street’s major indexes reported gains Wednesday. The Dow Jones Industrial Average rose 40.68 points, or 0.2%, to 18,202.62. The technology-heavy Nasdaq Composite Index climbed 2.57 points, or 0.1%, to 5,246.41.

The CBOE VIX, a measure of implied volatility on Wall Street, fell 5.7% to a more than one-week low of 14.41. Anything below 20 is a sign of complacency in the market.

In economic data, US housing starts plunged in September, while building permits soared, painting a mixed picture of residential real estate at the end of the third quarter. Groundbreaking for new homes fell 9% to a seasonally adjusted 1.047 million. Permits, a bellwether of future construction plans, gained 6.3% to a 1.225 million pace.

On Tuesday, the National Association of Home Builders (NAHB) said housing market conditions remained strong in October, despite a slight pullback in the housing market index.

Housing data will continue to make headlines on Thursday when the National Association of Realtors (NAR) reports on September existing home sales.

Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.