U.S. stocks rose modestly on Wednesday, boosted by a rally in the energy sector and stronger-than-expected quarterly results from Morgan Stanley, but weak housing data and a disappointing tech outlook limited the market’s advance, reported MarketWatch.
Crude oil futures rose 2.6% after Saudi Arabia’s oil minister Khalid A. Al-Falih said improving fundamentals and market rebalancing would continue to aid the recovery in the commodity. Futures extended gains after the U.S. Energy Information Administration said domestic crude supplies fell by 5.2 million barrels in the week ended Oct. 14.
The S&P energy sector rose nearly 2%, by far the biggest gainer on the day, helping the S&P 500 index rise five points, or 0.3%, to 2,145.
Morgan Stanley rose 0.6% after it reported a profit that beat analyst forecasts. The stock was the latest in a string of financials—including Goldman Sachs Group Inc. and J.P. Morgan Chase & Co.JPM, —that topped consensus expectations and boosted equities. The S&P financial sector rose 0.9%.
“Not only have these financials beat, but they’ve beat pretty solidly, which has led to some upside,” said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.
The Dow Jones Industrial Average rose 65 points, or 0.4%, to 18,227 and the tech-heavy Nasdaq Composite Index edged up less than a point to 5,244.
Intel Corp. was the worst performer in both the Dow and the S&P 500 after it reported a disappointing revenue outlook, even as its third-quarter earnings rose almost 9%. The stock slumped 6.1%.
Steven Ricchiuto, chief economist for Mizuho Securities USA, blamed the market’s lackluster trading on worries over valuation as stocks are trading near levels that had triggered strong sales in the past.
“The domestic equity market appears to be struggling against valuation concerns even though this morning’s earnings releases were fairly positive,” he said in a note. “When good news doesn’t lead to solid gains it is a sign that markets are overbought.”
The coming election is also keeping some investors from actively participating in the market, according to the economist.
“Trading volumes have also been disappointing. Our read on this situation is that investors are beginning to realize that the upcoming election will do little to correct the problems confronting the domestic economy,” Ricchiuto said.
Major stock-market indexes have lately mostly been trading within a narrow range ahead of the U.S. presidential election between Democratic nominee Hillary Clinton and Republican candidate Donald Trump. Currently, the S&P 500 is about 2.2% below its intraday record.
“We’re not in a bad position, but we haven’t made much progress since July, and I don’t see that changing with the big election we have coming up, which has a lot of people uneasy,” said Frederick.
The third and final presidential debate will take place Wednesday evening.
