Wall Street gains as oil surge eclipses massive jobless numbers

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(Reuters) – Wall Street bounced on Thursday as hopes of a truce between Saudi Arabia and Russia to cut oil output drove a record 22% surge in prices, outweighing the shock of over 6 million Americans filing for jobless claims due to virus-led lockdowns.

FILE PHOTO: NYSE-AMEX Options floor traders from TradeMas Inc. work in an off-site trading office built when the New York Stock Exchange (NYSE) closed, due to the outbreak of the coronavirus disease (COVID-19), in the Brooklyn borough of New York City, U.S., March 26, 2020. REUTERS/Brendan McDermid

The S&P energy index .SPNY, down by half this year, climbed 10%, with big gains for majors Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) powering a near 2% rise for both the S&P 500 .SPX and the Dow Jones .DJI.

Saudi Arabia has called for an emergency meeting of oil producers, while U.S. President Donald Trump said he expected the kingdom and Russia to cut output by as much as 10 million to 15 million barrels a day. [O/R]

“The surge in crude is helping the mood, so we’re seeing some relief in markets that have been hammered,” said Richard Steinberg, chief market strategist at Colony Group, in Florida.

The list of top gainers on the benchmark S&P 500 was dominated by oil companies. Apache Corp (APA.N), Diamondback Energy Inc (FANG.O) and Helmerich Payne (HP.N) advanced between 14% and 16%.

Brent LCOc1 was on track for its biggest one-day gain on record, but prices are still far from recovering last month’s steep losses.

A bump in prices may still not be enough to save some of the debt-laden U.S. shale companies that are on the brink of bankruptcy as demand continues to plunge, wrought by the coronavirus pandemic.

Analysts foresee a further decline in U.S. stocks as country-wide shutdowns to limit the spread of the virus result in a virtual halt in business activity and force companies to lay off employees and save cash.

Boeing Co (BA.N), once a symbol of America’s industrial might, has offered buyout and early retirement packages to employees.

Meanwhile, initial claims for unemployment benefits last week rose to 6.65 million, exceeding the top end of economists’ estimates at 5.25 million.

“They are really eye popping numbers, but at the end of the day it doesn’t really tell the whole story because we knew they were going to be bad,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management in New York.

“The real question is what happens by the end of the year.”

At 12:52 p.m. ET the Dow Jones Industrial Average .DJI was up 377.55 points, or 1.80%, at 21,321.06, the S&P 500 .SPX was up 49.73 points, or 2.01%, at 2,520.23 and the Nasdaq Composite .IXIC was up 112.09 points, or 1.52%, at 7,472.67.

Walgreens (WBA.O) fell 7% after the drugstore retailer reported a steep decline in U.S same-store sales in the last week of March. [L4N2BQ32Z]

Advancing issues outnumbered decliners by a 1.96-to-1 ratio on the NYSE and a 1.90-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week high and eight new lows, while the Nasdaq recorded three new highs and 70 new lows.

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