Stocks struggle for gains amid oil surge, biotech plunge

finance.yahoo.com

By Evelyn Cheng

U.S. stocks struggled for gains Thursday, as mixed earnings reports offset gains from a jump in oil prices.  

The iShares Nasdaq Biotechnology ETF (IBB) (IBB) briefly traded more than 5 percent lower, while Facebook leaped more than 12 percent and Amazon (AMZN) gained, pulling the Nasdaq composite between negative and positive territory. Apple (AAPL) struggled for direction.

"It's really Facebook and Amazon that are driving the market but my real concern as we pull back from the highs is this market is going to run up to resistance on any rally," said Marc Chaikin, CEO of Chaikin Analytics. "The inability of the market to hold up on good news (from stocks) like Facebook, which is a key player, is not good news."

Amazon.com (AMZN), Microsoft (MSFT), Visa (NYSE:V) and Electronic Arts (EA) are among companies due to report after the bell.

The Dow Jones industrial average dipped into negative territory as Walt Disney, American Express and UnitedHealth weighed. Earlier, the index added more than 100 points as Chevron (CVX) and Caterpillar (CAT) climbed.

The S&P 500 also struggled for gains as energy held more than 1.5 percent higher, while health care briefly fell more than 2.5 percent. Earlier, energy gained more than 3.5 percent to lead S&P 500 advancers, with the index spiking 1 percent in opening trade.

U.S. crude oil futures pared gains to hold just above $33 a barrel in mid-morning trade. Earlier, WTI surged above $34.50 to their highest since Jan. 6. Brent traded just above $34 a barrel after earlier topping $35.50 a barrel. The gains came on the possibility that major producers may cooperate to cut production.

"Obviously, certainly crude is driving the bus," said Jeremy Klein, chief market strategist at FBN Securities. He also noted support for stocks from some encouraging earnings reports and expectations the Federal Reserve will hold off on raising rates in the near-term.

Dow futures jumped more than 150 points in pre-market trade, shaking off pressure from a sharp miss on durable goods, as oil gained.

Russian Energy Minister Alexander Novak said Thursday that Saudi Arabia had proposed to cut oil production by up to 5 percent by each country in order to support weak oil prices, Reuters reported.

Celgene (CELG) posted fourth-quarter earnings that fell short of analysts' estimates, hurt by higher costs. The company's net profit fell to $561 million, or 69 cents per share, in the fourth quarter, from $613.9 million, or 74 cents per share, a year earlier, Reuters reported.

Facebook (FB) reported earnings after the close Wednesday that blew past estimates, with the firm beating the $1 billion mark in quarterly net income for the first time ever.

Caterpillar (CAT) reported adjusted fourth quarter profit of 74 cents per share, five cents above estimates, though revenue was light. Caterpillar does see full-year 2016 profit above current Street estimates, as it benefits from cost controls and restructuring.

U.S. stocks fell more than 1 percent Wednesday after the Federal Reserve meeting statement renewed concerns about global growth. Disappointing earnings reports from Apple and Boeing also weighed heavily on stocks, despite gains in oil prices.

Earlier, futures came well off session highs, with Dow futures briefly turning negative after December durable goods orders declined far more than expected.

Durable goods fell 5.1 percent in December , far more than expectations for a less-than 1 percent decline. Ex-transportation, the figure declined 1.2 percent.

"That's another indication the economy is continuing to slow and an indication the Fed is going to hold off in the first half of this year," said Peter Cardillo, chief market economist at First Standard Financial.

Weekly jobless claims came in at 278,000.

Treasury yields edged lower after the durable goods report, with the 10-year dipping below 2 percent, before mostly turning higher as oil climbed.

 
Pending home sales rose just 0.1 percent in December from a downwardly revised November print.

The 10-year yield held steady at 2 percent, while the 2-year yield was lower near 0.82 percent as of 10:51 a.m. ET. 

The U.S. dollar traded about 0.3 percent lower against major world currencies, with the euro above $1.09 and the yen at 118.73 yen against the greenback.

In morning trade, the Dow Jones industrial average (Dow Jones Global Indexes: .DJI) gained 117 points, or 0.74 percent, to 16,067, with Chevron leading advancers and American Express (AXP) the greatest of three decliners.

The S&P 500 (^GSPC) rose 17 points, or 0.89 percent, to 1,899, with energy leading nine sectors higher and health care the only decliner.

The Nasdaq (^IXIC) composite gained 46 points, or 1.03 percent, to 4,514.

The CBOE Volatility Index (VIX) (^VIX), widely considered the best gauge of fear in the market, traded near 22.

About four stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 128 million and a composite volume of 469 million.

Crude oil futures for March delivery gained $1.67 to $33.98 a barrel on the New York Mercantile Exchange.

Gold futures for February delivery fell 60 cents to $1,115.20 an ounce as of 9:52 a.m. ET.

—Reuters and CNBC's Peter Schacknow contributed to this report