Stock Market Close: Skidding Oil Prices Send Equities Higher

Buoyed by word Saudi Arabia expects its oil output to be fully restored by month’s end, stocks took a positive turn Tuesday as oil prices skidded and investors awaited word on interest rates from the Federal Reserve.

The Dow Jones Industrial Average was up 31 points at the close or 0.12%, the Nasdaq Composite added 0.4% and the S&P 500 gained 0.25%.

Volume on the New York Stock Exchange totaled 2.8 billion shares, with 1,552 issues advancing and 1,406 declining.

Leading the most actives were Chesapeake Energy Corp. (CHK), Bank of America Corp. (BAC) and Snap Inc. (SNAP).

Saudi Arabia issued a statement late Tuesday, saying it had restored half the capacity destroyed by the weekend attack on it Aramco facility at Abqaiq and nearby oil fields and it expected to ramp that up to 11 million barrels a day by the end of the month. The facility, the largest in the world, had been producing 9.6 billion barrels before the attack.

More than 20 drones and cruise missiles reportedly were fired from Iranian territory and at least one of them traversed Kuwaiti airspace. Pentagon officials were preparing a report on who was responsible for the attack on the largest oil processing facility in the world and nearby oil fields as U.S. Secretary of State Mike Pompeo headed to Saudi Arabia to discuss a response.

The Fed’s Federal Open Markets Committee begins its two-day meeting Tuesday with the interest rate announcement set for Wednesday. With rates currently at 2% to 2.25%, President Trump has been pushing for a drastic cut, but the FOMC is expected to cut just 25 basis points, its second cut in as many months, to try to cushion the U.S. economy from a slowdown resulting from the trade war with China and weak growth abroad.

Chairman Jerome Powell said in recent weeks he sees no signs of a recession on the immediate horizon and the Fed would proceed cautiously and in the bests interests of the economy, refusing to buckle to political pressure. Trump has said the Fed governors are a bunch of “boneheads” and demanded interest rates be cut to zero or less.

Nearly 50,000 United Autoworkers were in the second day of their strike at General Motors (GM). Negotiators said they still are far apart on a pattern contract for the industry.

On international markets, stocks were mixed. Hong Kong’s Heng Seng closed off 1.23%, Japan’s Nikkei 25 gained 0.6% and China’s Shanghai Composite was off 1.74%. Australia’s S&P/ASX added 0.33%.

London’s FTSE 100 closed flat, off 0.01%, the German DAX lost 0.06% and the French CAC gained 0.24%. The British pound was up 0.57% against the dollar while the euro gained 0.6% and the dollar index was off 0.39%.

Oil futures were off following Monday’s runup. Crude oil futures fell 6.15% and Brent crude was off 0.84%. Gold dipped 0.1% while silver added 0.38%.