Stock Market Rally Backed by Surge in Crude Oil Prices

Investors ignored the backstories – Comey firing, cyber-attack and North Korean ballistic missile test – and focused on two sectors, tech and oil prices, driving the S&P 500 Index and NASDAQ Composite to record high closes on Monday.

Energy stocks were among the best performers after a sharp rise in crude prices, helping to drive the S&P 500 about 0.5 percent higher. The NASDAQ was led once again by high-flyers Facebook and Alphabet. Shares of tech giant Apple also hit record highs.

The Dow Jones Industrial Average was supported by a sharp rise in Cisco Systems, which rose in reaction to the global cyber-attack.

U.S. Economic News

It was a relatively quiet day in the U.S. The National Association of Home Builders survey showed sentiment among homebuilders came in at 70 for May. The number was better than the 68 estimate. The move over 50 indicates positive sentiment. A year ago, the survey was at 58.

The Empire State manufacturing index dropped to negative 1 in May from a print of 5.2 last month. Traders were looking for a reading of 7.2.

TIC Long-Term Purchases were 59.8 billion, below the 68.3 billion forecast. This report measures the difference in value between foreign long-term securities purchased by U.S. citizens and U.S. long-term securities purchased by foreigners.

Gold

June Comex Gold futures managed to eke out a small gain despite the rise in U.S. equity prices. Traders were drawn into the safe-haven asset because of U.S. political turmoil, a successive missile test by North Korea and a worldwide cyber-attack. Weaker-than-expected U.S. economic data also drove down the U.S. Dollar and Treasury yields, making gold a more desirable investment.

In other news, money managers’ net longs in COMEX gold fell to the lowest in six-weeks in the week-ended May 9. However, demand remained strong in China and India.

Crude Oil

U.S. West Texas Intermediate and internationally-favored Brent crude oil surged about 2 percent on Monday, after Saudi Arabia and Russia said that supply cuts need to last into 2018, a step towards extending an OPEC-led deal to support prices for longer than the original deal struck in late November 2016.

Forex

The U.S. Dollar was under pressure against a basket of currencies on Monday. The rally in crude oil helped boost the Canadian and Australian Dollars. The Aussie was also supported by a rise in iron ore exports. The dollar was also pushed lower by a surprise drop in business activity in New York state.