NOI Natl Oilwell

By Riva Gold and Aaron Kuriloff 

U.S. stocks rose Tuesday as gains in energy shares helped lift the S&P 500 within 1% of its all-time closing high.

Climbing energy shares have helped lift the index in recent weeks, amid rising oil prices and investors' increasing comfort with the pace of U.S. interest rate increases. The S&P 500 closed Monday at its highest level since November.

Oil prices extended gains Tuesday as the dollar weakened and global outages curbed supply. U.S. crude rose 0.7% to $50.03 a barrel after settling at its highest level since July on Monday.

The Dow Jones Industrial Average gained 68 points, or 0.4%, to 17988 and briefly crossed the 18000 mark. The S&P 500 climbed 0.4% and the Nasdaq Composite Index rose less than 0.1%.

Energy shares in the S&P 500 added 1.9% as Newfield Exploration climbed 4.8% and National Oilwell Varco gained 3.2%.

Energy shares in the S&P 500 have rallied more than 10% in the past three months, while the materials sector has gained over 9%. Chevron and Exxon Mobil were among the biggest gainers in the Dow industrials.

"Oil has continued to strengthen, giving people comfort that at some point we can see a recovery in S&P 500 earnings," said Doug Foreman, chief investment officer at Kayne Anderson Rudnick Investment Management.

"Areas like energy, industrial materials and a lot of commodities -- which had been decimated -- are coming out of a depression, and that change alone is very, very positive for the overall marketplace," he said.

Many investors also drew reassurance from a speech by U.S. Federal Reserve Chairwoman Janet Yellen on Monday, in which she said Fed officials expect the economy to improve but won't raise interest rates until new uncertainties about the economic outlook are resolved.

"We think they're going to move very, very slowly," said Monica Defend, head of global asset allocation research at Pioneer Investments.

Friday's weaker-than-expected jobs report sharply reduced expectations for a rate rise at the Fed's June and July meetings. Market participants currently price just a 4% chance of a rate rise in June and a 25% chance of a rise by July, according to Fed-fund futures tracked by CME Group.

"Every data point is really being dissected," said Chris Dyer, director of global equity at Eaton Vance. "Consumer strength has been a real engine of growth in the U.S. economy, and this [jobs report] raises a little bit of a red flag," he said.

Still, many investors say the U.S. economy is strong enough to allow the S&P 500 to reach a fresh all-time high.

"Historically we have lower [growth] numbers, but when you make a cross comparison with the rest of world, still the U.S. stands to be the most resilient economy," Ms. Defend said.

The Stoxx Europe 600 rose 1.1%, led by energy companies, following an upbeat session in Asia.

Earlier, shares in Asia mostly closed higher, boosted by the recent rally in commodities and a strong finish on Wall Street. Japan's Nikkei Stock Average added 0.6%, while Hong Kong's Hang Seng Index gained 1.4%.

Australian shares inched up 0.2% after the country's central bank left rates unchanged as expected, while the Australian dollar rose 1.1% against the dollar to $0.7453.

In other currencies, the euro edged down less than 0.1% against the dollar to $1.1355, while the dollar lost 0.2% against the yen to Yen107.3070.

The British pound recovered 0.8% against the dollar to $1.4564 after new polls suggested support for the U.K. to remain in the European Union in a June 23 referendum.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

June 07, 2016 12:14 ET (16:14 GMT)

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