US open: Stocks gain as oil prices rise ahead of Yellen speech
US stocks advanced on Monday as oil prices jumped and as investors awaited a speech from Federal Reserve chair Janet Yellen.
At 1518 BST, the Dow Jones Industrial Average rose 0.54%, the S&P 500 increased 0.44% and the Nasdaq climbed 0.36%.
At the same time oil prices rallied after Exxon Mobil reported a pipeline failure and spill at its Torrance refinery near Los Angeles. Supply disruptions in Nigeria also propped up prices as it helped to soothe the global output glut.
West Texas Intermediate crude rose 2.4% to $49.83 per barrel and Brent increased 2.2% to $50.77 per barrel at 1525 BST.
Analysts said a sharp fall in the dollar on Friday following a worse-than-expected US non-farm payrolls report had also supported an increase in crude prices. A weaker dollar helps demand in the rest of the world as it makes oil imports traded in the currency cheaper.
The dollar, however, regained ground on Monday rising 0.05% against the euro, 0.42% versus the pound and 0.79% against the yen.
Meanwhile, a speech by Yellen will be dissected carefully for clues on the timing of the next interest rate hike. Friday’s weak jobs report has led some economists to believe a rate increase at the 14-15 June policy meeting is unlikely.
“Yellen has recently said she expects a rate hike to come in the ‘coming months’. One data point won’t derail the Fed’s expectation of gradually raising rates, but in the minds of the majority of the FOMC, likely pushes back the next rate rise to September,” said Jasper Lawler, market analyst at CMC Markets.
Yellen is delivering a speech on the economic outlook and monetary policy at the World Affairs Council of Philadelphia’s luncheon at 1730 BST.
Speaking in Finland, Boston Fed President Eric Rosengren said earlier on Monday that a rate hike was still likely, albeit not this month, despite the weak jobs report.
He said it was important to wait and see whether the weak jobs report was a reflection of a broader slowing in labour markets or just an anomaly.
On the corporate front, energy stocks edged higher on the increase in crude prices with Chesapeake Energy, Halliburton and Exxon Mobil in the black.
Banks also gained as bond yields made a modest recovery after a sharp fall on Friday. JPMorgan Chase and Citigroup were among the risers. The yield on the 10-year US Treasury note rose to 1.73% from 1.70%.