U.S. stocks closed higher in low volume trade Wednesday, helped by a rise in oil prices, as investors awaited Thursday’s European Central Bank decision on monetary policy. ()
“I think the big focus is how the expectations in the marketplace are going to be met by the announcement tomorrow,” said Daniel Deming, managing director at KKM Financial.
ECB President Mario Draghi is expected to announce more stimulative measures, with hopes of expansion of the asset purchase program and a possible further cut to the already negative deposit rate.
The Federal Reserve and Bank of Japan are due to hold meetings next week.
Energy briefly traded more than 2 percent higher to lead S&P 500 advancers as higher oil prices continued to bring in both short covering and longer-term positioning, traders said.
U.S. crude oil futures settled up $1.79, or 4.90 percent, at $38.29 a barrel, its highest settle since Dec. 4. Oil extended gains after weekly crude oil inventories showed a rise of 3.9 million barrels but a drop of 4.5 million barrels in gasoline inventories.
Hopes of curbing production also supported the rise in oil.that OPEC and non-OPEC members would meet in Moscow on March 20 to discuss an output freeze. However, Russian Energy Minister Alexander Novak said Wednesday that no time or place had been agreed for such a meeting this month, Reuters reported, citing the Russian TASS news agency.
Robert Pavlik, chief market strategist at Boston Private Wealth, said higher oil prices should have contributed to greater gains in stocks. “I think the ECB meeting is keeping a lid on the stock market. People are just not sure,” he said.
Confidence in the effectiveness of monetary policy has waned since Draghi disappointed investors at the ECB’s December meeting and the yen strengthened following the Bank of Japan’s surprise move to negative rates in late January.
“That leads to a lack of credibility to central banks that adds another layer of uncertainty,” said Bryce Doty, senior fixed income manager with Sit Investment Associates.
The major averages initially spiked following the surge in oil, before briefly giving up gains. The Dow Jones industrial average and Nasdaq composite temporarily fell into negative territory.
“We know that this is a week that we overreact to the inputs we get because they’re few,” said Art Hogan, chief market strategist at Wunderlich Securities.
briefly declined about 1 percent and the temporarily traded more than 1.5 percent lower. attempted gains.
Biotechs came under pressure amid a U.S. government health agency proposal that would change the way Medicare compensates doctors who administer drugs in their offices as a way to try to cut drug spending, Reuters said.
and contributed the most to gains on the Dow, while was the greatest contributor to declines.
“It just feels like the only players in the market are momentum players,” Deming said. “They’re really short term, just trying to play these nuances and the shifts in sentiment.”
The U.S. dollar index reversed to trade a touch lower, while the euro climbed above $1.10. The yen was at 113.29 yen against the greenback. Gold came well off lows after briefly hitting its lowest in almost a week.
Treasury yields were higher, with the 2-year at 0.89 percent and the 10-year at 1.89 percent as of 3:11 p.m. ET.
The Treasury auctioned $20 billion of 10-year notes at a high yield of 1.895 percent. Demand was the weakest since August, following a poor auction of three-year notes on Tuesday, Reuters said.
Peter Boockvar, chief market analyst at The Lindsey Group, attributed some support to stocks from gains in European stocks ahead of the ECB meeting.
“I think what we’ve seen over the past month is a bear market rally and what we hear from central bankers over the next week could mark the end of that,” he said. To him, the bull market that celebrates its seventh anniversary Wednesday actually ended in the middle of last year.
The S&P 500 is up 193 percent since the close on March 9, 2009, marking the third-longest bull market in history.
“I think investors are just worrying how long is the bull market going to keep going,” said Mike Bailey, director of research at FBB Capital Partners. “If you set aside equities and look at fundamentals, they’re looking a bit better than maybe stocks might have indicated in February.”