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Tuesday June 2nd, 2020 4:22PM

Surging oil prices and energy companies send stocks higher

By The Associated Press
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NEW YORK (AP) — U.S. stocks are rising Friday to wrap up a turbulent week as energy companies climb along with the price of oil. Oil producers in OPEC agreed to produce more oil, a step investors have expected for the last few weeks. The European Union is following through on its promise to put import taxes on $3.4 billion in U.S. goods including bourbon, peanut butter and orange juice in response to U.S. tariffs on steel and aluminum. President Donald Trump threatened to put a 20 percent tax on cars imported from Europe.

KEEPING SCORE: The S&P 500 index added 11 points, or 0.4 percent, to 2,761 as of 3:15 p.m. Eastern time. The Dow Jones Industrial Average was on track to break an eight-day losing streak as it gained 181 points, or 0.7 percent, to 24,643. The Dow is down 1.8 percent this week, with Boeing off 5.2 percent and Caterpillar down 6.3 percent. Both companies are having their worst week since March. Makers of chemicals and other basic materials like 3M also lost ground and technology companies slipped.

The Nasdaq composite fell 6 points, or 0.1 percent, to 7,706. The Russell 2000 index of smaller-company stocks sank 7 points, or 0.4 percent, to 1,681.

OIL: Oil prices and energy companies rallied as the countries of OPEC agreed to boost production by almost 1 million barrels per day. While prices usually go down when oil production rises, investors thought OPEC might take a bigger step based on reports over the last few weeks.

"People were pricing crude in the last couple of weeks (expecting) a bigger increase by OPEC than what they agreed to," said Jim Paulsen, chief investment strategist for the Leuthold Group.

U.S. crude climbed 4.6 percent to $68.58 a barrel in New York. That was its biggest one-day gain since November 2016, when OPEC and a group of other countries including Russia agreed to cut production by 1.8 million barrels a day. Prices have been rising since then, and U.S. crude hit a three-year high of about $72 a barrel in May.

Brent crude, the standard for international oil prices, rose 3.4 percent to $75.55 a barrel in London.

Exxon Mobil picked up 2.2 percent to $81.46 and Marathon Oil surged 8.1 percent to $21.53.

TARIFFS: The European Union is enforcing tariffs on $3.4 billion in U.S. products as of Friday in retaliation for duties the Trump administration has put on European steel and aluminum. The taxes are on American products including bourbon, peanut butter and orange juice, and the choices appear designed to create political pressure on Trump and senior U.S. politicians.

EU authorities had said the move was coming in response to the U.S. import duties. On Twitter, Trump threatened to impose a 20 percent tax on cars imported from the EU if barriers to trade are not removed soon. He previously ordered the U.S. Trade Representative to look into possible tariffs or quotas on imported cars and car parts.

That jolted car companies. In Germany, shares of BMW lost 1.1 percent and Daimler sank 0.3 percent. Daimler fell more than 4 percent Thursday after it said Chinese tariffs on U.S. cars would contribute to a decline in its earnings this year. Ford and Toyota also dipped while Peugeot and General Motors rose.

"If you're in the direct line of fire from a tariff it's hugely important," said Paulsen. Still, he said investors are very skeptical that a damaging trade war will break out.

"The trade war has heated up over the last couple of months and yet stocks are up over that period of time," he said. That was also the case Friday, as tariff talk ramped up but stocks moved higher.

TECH SLIPS: Open source software maker Red Hat dropped 12.5 percent to $145 after it cut its sales forecasts due to the strengthening dollar. Other technology companies also declined. The industry has been leading the market for more than a year, but it makes more of its sales outside the U.S. than any other major S&P 500 sector. Micron Technology fell 3.3 percent to $57.46 and Nvidia lost 2 percent to $251.86.

OTHER COMMODITY TRADING: Wholesale gasoline jumped 2.9 percent to $2.07 a gallon. Heating oil added 2.7 percent to $2.13 a gallon. Natural gas skidded 1 percent to $2.95 per 1,000 cubic feet.

Gold slid 0.3 percent to $1,270.70 an ounce. Silver added 0.8 percent to $16.46 an ounce. Copper edged up 0.2 percent to $3.03 a pound.

BONDS: Bond prices were little changed. The yield on the 10-year Treasury note stayed at 2.90 percent.

CURRENCIES: The dollar rose to 109.91 yen from 109.90 yen. The euro advanced to $1.1663 from $1.1617.

OVERSEAS: The CAC 40 in France climbed 1.3 percent and Britain's FTSE 100 gained 1.7 percent. In Germany the DAX rose 0.5 percent.

Some Asian markets gained following heavy losses on previous days but finished lower than a week ago. Hong Kong's Hang Seng index edged up 0.2 percent while Japan's Nikkei 225 lost 0.8 percent. The South Korean Kospi advanced 0.8 percent.

___

AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jay

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Utilities
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