U.S. stocks end higher after oil climbs 3%; energy leads

U.S. stocks ended higher Monday, led by energy, following the second presidential debate while investors digested a rise in oil prices.

“It’s a quiet day,” said Craig Sterling, head of U.S. equity research at Pioneer Investments. “Putin came out earlier and was more constructive on energy and that was it.” “I don’t expect a lot more until we get more macro news,” he said.

The Dow Jones industrial average rose about 88 points, with Apple and Boeing contributing the most gains, after gaining 159.47 points at session highs.

“You have more clarity from the U.S. election, with the uncertainty from that heading lower; you’ve got less uncertainty from OPEC, and that’s bullish for stocks,” said Adam Sarhan, CEO of Sarhan Capital.

The S&P 500 gained about 0.5 percent, with energy rising about 1.5 percent.

“A breakout appears likely from a short-term momentum standpoint, and we highlight shifts on the macro front that are indicative of risk-on positioning,” said Katie Stockton, chief technical strategist at BTIG. “Consecutive daily closes above the 50-day moving average near 2158 would mark a breakout and set the stage for new all-time highs, with only minor resistance at the August high near 2194.”

The Nasdaq composite advanced approximately 0.7 percent, with Apple and the iShares Nasdaq Biotechnology ETF (IBB) gaining more than 1 percent. The Nasdaq 100, meanwhile, hit a new all-time intraday high of 4,904.72.

“Overall, there was a lot of negativity surrounding biotechs. We got some positive data from some of the small and midcap companies and that’s boosting the [IBB],” said Mike Bailey, director of research at FBB Capital Partners.

“I think we’re still sort of in between catalysts,” he said. “I think the market is up today on a lack of negative catalysts and some soft, positive catalysts.” Bailey added the next major catalyst for stocks will be earnings season, which is set to begin this week.

U.S. crude rose 3.1 percent to settle at $51.35 per barrel while Brent futures hit a one-year high after Russian President Vladimir Putin said Russia is ready to join a proposed cap on oil output by OPEC members.

Putin, speaking at an energy congress in the Turkish city of Istanbul, said he hoped that OPEC members would confirm the decision to adopt quotas for output when the organization meets in November.

“This has removed the uncertainty and now we are in clear,” said Naeem Aslam, chief market analyst at Think Markets, in a morning note. “However, it is important to keep in mind that unless we see the planned action complete, caution may be the best practice. If history tells us anything, it is this that these major oil players also have habit to not to respect the agreed agreement.”

Investors were also keeping an eye on the U.S. presidential election.

Donald Trump and Hillary Clinton squared off in a town hall-style debate Sunday night in St. Louis. Trump, in particular, largely stuck to personal attacks, threatening at one point that he would “get a special prosecutor” to look into Clinton’s handling of classified information if he were elected president.

“I would have to agree that the market is taking at [a tie],” said Peter Cardillo, chief market economist at First Standard Financial. “If the market had thought that Trump had gotten a positive gain, we wouldn’t be higher.”

U.S. stock futures traded higher before the opening bell, with Dow futures rising more than 100 points, while S&P and Nasdaq futures gained 11.75 points and 24.25 points, respectively. Still, Cardillo said trading volume was likely to be light on Monday, given the Columbus Day holiday during which U.S. banks were closed.

The Mexican peso shot about 2 percent higher against the dollar on Monday. The dollar-Mexican peso trade has been a proxy trade during the election, given Trump’s desire to build a wall along the Mexican border and call to go as far as withdrawing the U.S. from NAFTA if he were elected.

Trump “had a better evening compared to his previous showdown with the former Secretary of State, yet all polls currently suggest that the Democrat will be the one to pack her bags for the White House,” said Jeremy Klein, chief market strategist at FBN Securities.

Trump’s campaign has been under fire recently, after a leaked 2005 video of the GOP standard bearer’s vulgar remarks about women caused uproar.

In economic news, there are no major data due Monday. The U.S. bonds market was also closed due to the Columbus Day holiday.

The dollar rose 0.31 percent against a basket of currencies, with the euro near $1.114 and the yen around 103.6. Currency traders also kept an eye on the British pound, following its “flash crash” against the dollar last week. The pound traded 0.6 percent lower against the dollar, near $1.236.

Overseas, European equities rose after receiving a boost from crude prices. The pan-European Stoxx 600 index gained 0.69 percent. In Asia, stocks closed mixed.

In corporate news, Mylan agreed to pay $465 million to settle charges that it overcharged the government for its EpiPen products. Meanwhile, Twitter shares fell more than 11.5 percent after Bloomberg reported the company was unlikely to be bought out by another company.

The Dow Jones industrial average rose 88.55 points, or 0.49 percent, to close at 18,329.04, with ExxonMobil leading advancers and Procter & Gamble leading decliners.

The S&P 500 rose 9.92 points, or 0.46 percent, to end at 2,163.66, with energy leading all sectors higher.

The Nasdaq closed 36.27 points higher , or 0.69 percent, at 5,328.67.

About three stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 669.28 million and a composite volume of 2.817 billion at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.4.

Gold futures for December delivery rose $8.50 to settle at $1,260.40 per ounce.

Source: CNBC & Reuters