U.S. equities and stock exchange traded funds popped Monday as rising commodity prices helped lift the energy and materials sectors.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were 0.5% higher Monday.
Leading the charge, energy company stocks in the S&P 500 gained 1.1% as crude oil prices surged in response to Saudi Arabia and Russia’s plans to back a nine-month extension to a production cut deal originally backed by the Organization of Petroleum Exporting Countries.
“We have, before coming to this announcement today, reached out to many of our colleagues within and outside OPEC, and I think there is general consensus that this is the right approach and the right thing to do,” Saudi Arabia’s energy minister Khalid al-Falih said, according to the Wall Street Journal.
With the backing of the oil cartel, energy traders helped push oil prices to their highest in over three weeks. West Texas Intermediate crude oil futures were 2.6% higher to $49.1 per barrel while Brent crude oil was up 2.4% to $52.1 per barrel.
“The rebound in oil prices and lack of bad news on the geopolitical front has led to a bit of a relief rally in equities,” Randy Frederick, vice president of trading and derivatives for Charles Schwab, told Reuters. “At this level, there isn’t too big a correlation between oil and equities but since we’ve seen oil fall quite a bit in a month or so, today’s rally in oil is helping the market grind higher.”
Miner stocks also jumped, with materials sector companies in the S&P 500 rising 1.1%, on gains in base metals prices after Chinese President Xi Jinping promised over $100 billion in new financing as part of a mega-infrastructure project, “One Belt, One Road.” Over $900 billion is expected to be invested in roads, ports, pipelines and other infrastructure as part of the project, spanning countries in Asia, Africa and Europe.
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