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Sarhan in CNBC: Dow, S&P tracking for three-day win streak; materials lead

Wed 6.8.16 3:22 PM EST

U.S. stocks traded mostly higher Wednesday, helped by gains in oil prices, with the Dow and S&P about 1 percent below their 52-week intraday highs, touched last summer.
Traders also attributed support to stocks from the weaker U.S. dollar. The U.S. dollar index traded about 0.3 percent lower, with the euro near $1.14 and the yen around 106.9 yen against the greenback as of 2:33 p.m. ET.
Materials led advancers on the S&P 500, which was tracking for its third-straight day of gains. The Dow Jones industrial average was also on pace for its third-straight day of gains and tried to hold above the psychologically key 18,000 level with UnitedHealth contributing the most to gains. The Dow traded above that level Tuesday for the first time since late April but failed to close above it.
“It’s not as impressive when you say we were at those highs last year and we’re right there now,” said Ben Pace, CIO of HPM Partners.
The Dow transports briefly traded more than 1 percent higher on the day and held gains of more than 5 percent for the year so far.
“Transports continue to tell a story about the economy that’s different from the mainstream,” said Art Hogan, chief market strategist at Wunderlich Securities.
U.S. crude oil futures settled up 87 cents, or 1.73 percent, at $51.23 a barrel.
EIA data showed a draw of 3.2 million barrels in crude and builds in gasoline and distillate inventories. U.S. crude production edged higher, reversing a recent trend of declining output.
Late Tuesday, API reported a larger-than-expected U.S. crude stockpile draw, Reuters said.
“Maybe it’s the rise in oil prices,” said Peter Boockvar, chief market analyst at The Lindsey Group.
“I don’t have any specific rational reason,” he said of the gains in stocks, adding that “the underlying story that’s being ignored is the continued reduction in growth and the decline in earnings.”
The Nasdaq composite held higher after earlier struggling to hold gains. Apple tried to trade higher, while the iShares Nasdaq Biotechnology ETF (IBB) was mildly lower.
“I think the market needs to consolidate around these levels. That’s bringing in some selling around this time,” said Peter Cardillo, chief market economist at First Standard Financial.
In economic news, the Job Openings and Labor Turnover Survey showed there were about 5.8 million job openings at the end of April.
Ahead of the Wednesday U.S. market open, the World Bank downgraded its 2016 global growth forecast to 2.4 percent from the 2.9 percent forecast in January.
“The investors already know global demand is already waning and is not that strong,” said Adam Sarhan, CEO of Sarhan Capital, “but they’re hoping the Fed and central banks are going to err on the side of easy money and eventually the economy will kick into gear. But that’s a big hope.”
Treasury yields traded lower, with the 2-year yield last around 0.77 percent and the 10-year yield near 1.70 percent. The Treasury held a 10-year note sale which saw solid demand.
The German 10-year bund yield held off session lows, after earlier hitting a fresh record low of 0.033 percent, according to Reuters Tradeweb data going back to 1992. The European Central Bank began its corporate bond purchase program Wednesday.
“Investors are being forced into risk assets,” Sarhan said.
European stocks closed slightly lower with bank stocks underperforming.
Asian stocks closed mixed, with the Nikkei 225 up 0.9 percent and the Shanghai composite off 0.3 percent.
China’s May trade data released overnight showed imports fell 0.4 percent, the smallest year-over-year decline since turning negative in November 2014, Reuters said. Exports declined a more-than-expected 4.1 percent.
Crude oil imports jumped the most in over six years, with iron ore imports the highest since December, the news wire said. Copper purchases were up more than 19 percent.
DJIA Dow Industrials 17998.10
59.82 0.33%
S&P 500 S&P 500 Index 2118.66
6.53 0.31%
13.12 0.26%
In afternoon trade, the Dow Jones industrial average rose 72 points, or 0.40 percent, to 18,010, with UnitedHealth leading advancers andVerizon the greatest laggard.
The S&P 500 rose 8 points, or 0.38 percent, to 2,120, with materials leading eight sectors higher and telecommunications and energy the only decliners.
The Nasdaq composite gained 17 points, or 0.35 percent, to 4,979.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded mildly lower near 14.
Gold futures for August delivery settled up $15.30 at $1,262.30 an ounce.
Reuters contributed to this report.
On tap this week:
8:30 a.m. Initial claims
10 a.m. Wholesale trade
1 p.m. $12 billion 30-year bond auction
10 a.m. Consumer sentiment
2 p.m. Federal budget
*Planner subject to change.