Stock Market Today: Oil Prices Jump; Dow Futures Edge Up – The Wall Street Journal

Oil prices surged on Monday after OPEC and its allies agreed to extend their production cuts for another month, boosting prospects of a recovery in the global energy market. move lifted Dow Jones Industrial Average, which rose 0.4% to close at a record high of 34,812. Nasdaq Composite, however, slipped 0.6% as technology stocks lagged behind. S&P 500 was little changed.

decision by OPEC+, which includes Russia and other non-OPEC producers, came as a surprise to many analysts who expected the group to ease its output curbs amid rising demand and falling inventories. group said it would maintain its current level of cuts of 9.7 million barrels a day, or about 10% of global supply, until May 31. Saudi Arabia, de facto leader of OPEC, also said it would continue its voluntary cut of 1 million barrels a day for another month.

the announcement sent oil prices soaring, with Brent crude, the global benchmark, rising 4.6% to $68.46 a barrel, its highest level since January 2020. West Texas Intermediate, U.S. benchmark, jumped 4.9% to $64.90 a barrel, its highest since October 2018.

Oil prices have rallied more than 30% this year as vaccine rollouts and stimulus measures have boosted hopes of a rebound in economic activity and fuel consumption. However, market still faces uncertainties from coronavirus pandemic, which has led to renewed lockdowns and travel restrictions in some parts of world.

“OPEC+ decision reflects reality that demand recovery is uneven and fragile,” said Giovanni Staunovo, an oil analyst at UBS Group AG. “market is still not out of woods.”

oil rally lifted energy stocks, which were among best performers in Dow on Monday. Chevron Corp. rose 2.6%, Exxon Mobil Corp. gained 3.6%, and Occidental Petroleum Corp. soared 9%. S&P 500 energy sector climbed 3.6%, outpacing all other sectors.

Dow also got a boost from Boeing Co., which rose 2.3% after Southwest Airlines Co. said it would buy 100 more 737 MAX jets from plane maker.

Nasdaq, meanwhile, struggled to keep up with broader market as investors rotated out of high-growth technology stocks that have benefited from low interest rates and pandemic-driven trends. Apple Inc., Microsoft Corp., Amazon.com Inc., Facebook Inc., and Alphabet Inc., parent company of Google, all fell more than 1%.

tech-heavy index has lagged behind Dow and S&P 500 this year as rising bond yields have dented appeal of growth stocks that trade at high valuations.

“market is still digesting implications of higher interest rates and inflation expectations,” said Quincy Krosby, chief market strategist at Prudential Financial Inc. “There is a tug of war between growth and value stocks.”

In economic news, a closely watched gauge of U.S. manufacturing activity showed a slowdown in March amid supply-chain disruptions and rising costs. Institute for Supply Management’s manufacturing index fell to 64.7 from a three-year high of 60.8 in February, missing analysts’ expectations of 61.3.

Despite decline, index remained well above 50 level that separates expansion from contraction, indicating that manufacturing sector continued to grow at a robust pace.

“Manufacturing activity remains very strong,” said Michael Pearce, senior U.S. economist at Capital Economics. “But supply constraints are becoming an increasing drag on production and pushing prices higher.”